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How Mark Carney’s Liberals Could Reshape Housing and Mortgages in Canada
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With Mark Carney now leading a Liberal minority government, Canadians can expect housing to take centre stage in national policymaking. Carney’s economic credentials are unmatched, and his government has already rolled out bold new plans to speed up home construction, improve affordability, and support Canadians facing higher mortgage rates and inflation.
But how will these federal moves actually impact you — especially if you’re a homebuyer, homeowner, or mortgage shopper?
Let’s explore what the Carney-led Liberals have proposed, what it could mean for housing supply, interest rates, and the mortgage market — and how you can plan ahead.
Who Is Mark Carney — And Why Does He Matter to Homeowners?
Mark Carney isn’t your typical Prime Minister. He’s a seasoned economist who’s held some of the world’s top financial positions — including Governor of the Bank of Canada during the 2008 crisis and Governor of the Bank of England during Brexit and the early pandemic.
He’s built a global reputation for cool-headed economic management. Now, as Prime Minister, Carney is applying that expertise to Canada’s housing crisis. His goal? Double housing construction, control inflation, and protect Canadians from global shocks like U.S. tariffs.
In short: Carney understands the market forces that impact your mortgage rate — and now he’s in a position to influence them.
A National Housing Developer to Build Homes Faster
One of the most ambitious Liberal plans is the creation of Build Canada Homes — a federally run housing developer that would work like a national builder, targeting federal “lazy land” and ramping up prefabricated and affordable construction.
The goal is to double Canada’s annual housing starts to 500,000, with up to $25 billion in financing for prefab builders and $10 billion in low-cost capital for affordable housing projects.
Housing analysts are cautiously optimistic. Countries like Singapore and Austria have successfully used public housing authorities to fast-track supply. If Build Canada Homes works as planned, it could shift the supply-demand balance that has long pushed Canadian home prices sky-high.
🏗️ Canada’s Housing Starts – Historic vs Government Targets (2020–2030)
Canada’s housing shortage remains one of the biggest economic challenges. This table compares actual housing starts with federal housing targets through 2030.
| Year | Actual Starts | Targeted Starts | Gap |
|---|---|---|---|
| 2020 | 213,000 | 250,000 | −37,000 |
| 2021 | 271,000 | 300,000 | −29,000 |
| 2022 | 262,000 | 325,000 | −63,000 |
| 2023 | 210,000 | 350,000 | −140,000 |
| 2024 (est.) | 215,000 | 400,000 | −185,000 |
| 2025–2030 (avg. target) | — | 500,000/year | — |
🧱 Note: CMHC estimates that Canada needs to build over 5.8 million homes by 2030 — nearly double the current annual pace.
Fast-Tracking Modular and Prefab Construction
The government is also leaning heavily into prefabricated and modular housing, which allows homes to be built in factories and assembled quickly on-site — reducing costs and timelines.
This model has worked in Sweden and Japan, where factory-built housing has helped meet demand in tight markets. In Canada, it could help reduce the pressure on trades and supply chains, provided the patchwork of provincial building codes can be streamlined.
Dr. Mike Moffatt, a housing policy expert, says Canada has the capacity but needs regulatory coordination to scale. Without that, prefab growth could stall.
Bringing Back the MURB Tax Incentive for Rental Units
To encourage new rental construction, the Liberals are planning to revive the Multi-Unit Residential Building (MURB) tax incentive — a 1970s-era policy that let investors write off the costs of building rental apartments.
The idea is to shift investor focus away from individual condo units toward larger, purpose-built rentals. But without zoning reforms in cities like Toronto or Vancouver, the impact may be limited.
Still, it’s a signal that the federal government wants to get more middle-market rental housing on the ground — not just luxury condos or single-family homes.
GST Relief for First-Time Buyers
Another highlight: GST cuts for first-time homebuyers purchasing new homes under $1 million — with partial relief for homes priced between $1–$1.5 million.
While this isn’t the same as the current GST rebate (which applies to all primary residences), it could offer meaningful savings to first-time buyers. That said, experts warn that it might not do much to increase housing supply, since builders are already scaling back due to high costs.
Bigger Forces Still Shape the Housing Market
While these policy ideas are bold, some factors remain out of Ottawa’s control:
- Tariff threats from the U.S. could raise the cost of building materials and push up inflation
- Economic uncertainty makes developers cautious
- Borrowing costs are still a big challenge for builders and buyers alike
As Simon Fraser’s Prof. Andy Yan puts it, “No federal program can completely override the effects of inflation, trade shocks, and volatile financial markets.”
🏡 Forces Shaping Canada’s Housing Market in 2025
From rising rates to tight inventory and shifting immigration, here’s what’s driving Canada’s housing trends in 2025.
📈 Demand Drivers
- 🇨🇦 High immigration and population growth
- 🏙️ Urban migration to major centres
- 📉 Declining rental vacancy rates
- 🏦 Anticipation of future rate cuts fueling FOMO
- 👨👩👧👦 Multi-generational families seeking bigger homes
🚧 Supply Constraints
- 🚜 Labour and materials shortages
- 📉 Decline in housing starts since 2023
- 🏗️ Zoning and permitting delays in cities
- 💰 High financing costs for builders
- 🌿 Green retrofitting priorities delaying new supply
📌 2025 Outlook: Without significant boosts to housing starts or changes in zoning, Canada’s housing affordability is likely to remain under pressure — especially in high-growth provinces.
More Affordability Help Beyond Housing
Carney’s Liberal government has also introduced measures to support household finances more broadly, including:
- A middle-class tax cut worth up to $825 per year for two-income households
- Reduced RRIF withdrawal rules for retirees
- A one-time 5% GIS top-up for low-income seniors
- Expanded disability tax credit access
- Funding for skilled trades training, to support faster housing construction
Together, these initiatives are designed to improve cash flow, creditworthiness, and the availability of skilled workers needed to build homes.
Interest Rates: What to Expect Post-Election
The big question for mortgage borrowers remains: What happens to interest rates?
The Bank of Canada has already cut rates twice this year. Another 75 basis points in cuts could arrive by year-end, especially if economic growth slows or tariffs escalate. That would make variable and adjustable-rate mortgages (ARMs) more attractive for some borrowers.
But fixed rates are a different story. They move with Government of Canada bond yields, which have been stubbornly volatile. If federal deficits rise or inflation lingers, bond yields could go up — and so will fixed mortgage rates.
What a Carney-Led Liberal Government Means for Borrowers
The short version? If Carney delivers on housing supply, affordability should gradually improve — especially in high-demand cities.
But if government spending grows too quickly or tariff tensions heat up, interest rates could stay higher for longer, putting pressure on fixed and variable mortgage costs.
Borrowers should be prepared for volatility while making smart, personalized decisions about their mortgages. You can’t control federal policy or global trade—but you can control your timing, your rate type, and your repayment strategy.
🏦 Fixed vs Variable Mortgages Under a Potential Carney Government
If Mark Carney leads a future government, his background as a central banker suggests a stronger focus on inflation control and stable monetary policy. Here’s how that could affect mortgage choices in Canada.
🔒 Fixed-Rate Mortgages
- Stable payments offer protection from policy rate hikes
- Preferred if inflation remains volatile or sticky
- Less flexibility for early repayment or breaking mortgage
- Rates may stay higher for longer under tighter fiscal stance
- Good for risk-averse borrowers during political transition
📉 Variable-Rate Mortgages
- Initially lower interest rates if BoC holds steady
- Higher risk if Carney prioritizes inflation with rate hikes
- Greater flexibility in rising-rate vs falling-rate scenarios
- More sensitive to shifts in economic policy under new government
- Better for short-term homeowners or aggressive paydown plans
📌 Policy Insight: Carney’s central banking experience suggests a cautious, data-driven approach — meaning borrowers should expect less volatility, but not necessarily lower rates.
Take Charge of Your Mortgage Strategy Today
Mark Carney’s plans may take years to fully unfold—but your mortgage decisions can’t wait that long. Whether you’re buying your first home or renewing at a higher rate, the right advice today can save you thousands tomorrow.
At Mortgage.Expert, we help you decode rate trends, choose the right product, and lock in competitive offers before the market shifts.
