Coalition’s 29-point housing plan targets down payments, foreign buyers and condo financing
Canada’s five largest banks and a group of major homebuilders want Ottawa to loosen the mortgage stress test for first-time buyers of newly built homes.
The proposal is one of 29 recommendations in a report released this week to inform the federal review of the National Housing Strategy.
The National Housing and Investment Initiative (NHII) pairs executives from Bank of Montreal, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Scotiabank and Toronto-Dominion Bank with developers including Mattamy Homes and Minto Group.
Its central argument is that homes built for ownership will not get built unless buyers can qualify for financing.
How the stress test could change for first-time buyers
The group wants a sliding minimum qualifying rate tied to mortgage term and buyer type. It would set a softer test for first-time buyers of new construction, for example qualifying them at the contract rate plus 1.5 percentage points rather than two.
The Office of the Superintendent of Financial Institutions (OSFI) is leaving the stress test unchanged, keeping qualification at 5.25% or two points above a borrower’s contract rate, whichever is higher, after it reviewed its mortgage stress test rules in January.
The report also calls for a federal down payment assistance program limited to new homes.
“The current stress test is a valuable prudential tool but may be too blunt an instrument by excluding otherwise creditworthy borrowers,” the report said.
The coalition acknowledged the trade-off. “However, there are concerns that loosening the rules could, among other things, cause a spike in resale home prices and harm affordability,” the report said.
It argued that limiting relief to newly built homes would keep that pressure off the resale market.
Foreign buyer and condo asks meet a slumping new-build market
The report names five priorities:
- a permanent version of Ontario’s enhanced harmonized sales tax (HST) rebate
- a capital gains rollover, modelled on the US Section 1031 provision, for investors who reinvest proceeds in purpose-built rentals
- alternatives to development charges
- a foreign buyer ban exemption for new construction
- an Owner-Occupied Construction Loan Program for condominiums
Ottawa has already acted on one of them. Its 2026 budget kept the foreign buyer ban but loosened its terms to exclude newly built properties.
Joel Fox, co-founder and chief operating officer of Ownright, warned Canadian Mortgage Professional of the risk that those places just sit empty.
Joel Fox of Ownright says allowing foreign buyers to purchase newly built homes could support new construction and housing supply, while continued restrictions on resale properties help address concerns around speculation. https://t.co/mkrwdSPIxq
— Canadian Mortgage Professional Magazine (@CMPmagazine) November 10, 2026
The report says the HST reforms helped sell about 5,000 additional homes in the program’s first three months.
Micky Khaneka of MKG Mortgages in Toronto said Ontario’s temporary HST rebate on new homes “has sparked some renewed interest in the newer homes, especially new builds.”
Condos remain the weak spot. According to the report, condos have historically supplied upwards of 40% of Canada’s urban housing stock, yet they have no equivalent to the $55-billion Apartment Construction Loan Program for rentals.
“I think the outlook for condos is still bad,” Mike Kazarian, a Toronto broker with Lenders’ Choice Mortgages, told CMP this week.
“It’s going to be two or three years because the population growth has basically plummeted. If that continues, there’s a lot of inventory right now and a lot of the preconstruction builders are doing fire sales.”
Brad Carr, CEO, Canada, at Mattamy Homes and NHII co-chair, said the country’s goals “will require a significant expansion of the development pipeline, greater access to long-term capital, modernized financial regulation, predictable immigration policies and access to better data to support all of those decisions.”
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