How Mark Carney’s Liberal Government Could Reshape Housing and Mortgages in Canada

If you’ve been following Canada’s latest political shift, you already know that Mark Carney is now Prime Minister—and housing is front and centre on the Liberal agenda. With sky-high home prices, stubborn inflation, and volatile interest rates, Carney’s platform is built around a bold promise: fix the housing crisis and protect Canadians from financial uncertainty.

But what does this really mean for homebuyers, renters, investors, and anyone carrying a mortgage?

Let’s break down how Mark Carney’s economic background, new policies like Build Canada Homes, and upcoming tax reforms could impact your wallet—and your mortgage strategy—in 2025 and beyond.

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Who is Mark Carney, and Why Does He Matter?

Before diving into policy, it’s worth understanding who’s steering the ship. Mark Carney isn’t just a politician; he’s a former Governor of the Bank of Canada and Bank of England. This is the man who helped navigate Canada through the 2008 global financial crisis and kept the UK economy relatively steady during Brexit.

Carney’s global experience, academic roots (he holds a PhD in economics from Oxford), and crisis-tested leadership make him a unique kind of Prime Minister—one who understands both Wall Street and Main Street. His approach to governance combines market discipline with social purpose, and his first major focus as PM is housing.

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Build Canada Homes: A Federal Developer Enters the Chat

One of the most ambitious planks of the Liberal housing plan is the creation of a new federal housing developer called Build Canada Homes. This agency would act like a national construction engine, using underutilized federal land and up to $25 billion in financing to build homes at scale.

Carney’s Liberals are aiming to double home construction to 500,000 units per year, with a big push for modular and prefabricated homes to bring down costs and speed up timelines. If done right, this could be Canada’s modern-day version of the post-WWII housing boom.

But skeptics say execution will be everything—public developers have had mixed results globally, and coordinating across provinces won’t be easy.

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Why Modular Housing is Suddenly a Big Deal

Modular housing, which uses factory-built components to create homes faster and cheaper, is a big part of this plan. Countries like Japan and Sweden have used it successfully, and Canada’s federal government wants to lead by example by purchasing at scale and standardizing regulations.

Experts like Dr. Mike Moffatt are cautiously optimistic. However, Canada’s patchwork of local building codes could slow down mass deployment unless provincial and municipal governments come on board.

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Bringing Back the MURB Incentive—But Will It Work?

In a move aimed at boosting rental supply, the Liberals want to revive the MURB (Multi-Unit Rental Building) tax incentive. This would allow investors to write off some construction costs for new rental apartments.

While this could shift investor focus from condo flipping to rental development, zoning laws and high land costs in cities like Toronto and Vancouver still present serious barriers. Plus, the economic conditions of the 1970s (when MURB first launched) were quite different—today’s cost of capital is much higher.

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GST Relief for First-Time Buyers—But With Limits

Here’s one for the new buyers: Carney’s Liberals propose eliminating GST on homes under $1M and cutting it for homes priced between $1M–$1.5M, but only for first-time buyers.

This isn’t the same as the current GST rebate. This would be an upfront price reduction, especially helpful for those buying pre-construction homes.

However, some experts warn this may not do much to increase supply—it might just fuel more demand in an already heated market.

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Forces Outside Ottawa’s Control Still Matter

Even with big promises, not everything is in the government’s hands.

Tariff tensions with the U.S., unpredictable bond yields, and inflationary pressures all affect how much it costs to build and borrow. Developers in cities like Vancouver and Toronto are already struggling to finance new projects because of high interest rates.

As Prof. Andy Yan from Simon Fraser University puts it: “Federal incentives help, but they can’t overcome economic gravity.”

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Beyond Housing: Other Affordability Promises

The Carney Liberals are also rolling out a number of affordability measures to boost household cash flow:

• Middle-class tax cuts that could save families up to $825 a year
• RRIF flexibility for seniors, reducing withdrawal requirements by 25%
• Increased GIS support for lower-income seniors
• Disability tax credit expansion
• More investment in trades and construction training

All of these aim to ease the pressure on Canadian households and build the labour force needed to meet housing targets.

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What Happens to Mortgage Rates Now?

Carney’s government will likely try to maintain stability during a time of global turbulence, but markets have a mind of their own.

The Bank of Canada has already delivered two rate cuts this year, bringing the policy rate down to 3%, and more cuts are possible in 2025. That means adjustable-rate mortgages (ARMs) and variable-rate mortgages (VRMs) may become more attractive again.

But bond yields are still volatile—especially with looming deficits, inflation concerns, and U.S. tariff threats. This means fixed-rate mortgages may see upward pressure, even as variable rates decline.

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What Carney’s Government Means for Borrowers

If these policies succeed, we could see more housing, slightly lower home prices, and improved affordability. But that won’t happen overnight. In the meantime, borrowers must deal with continued rate volatility.

If government deficits grow or inflation stays hot, the Bank of Canada may slow rate cuts, or bond markets might push yields up—resulting in higher mortgage rates for everyone.

So whether you’re buying, renewing, or refinancing, the best approach is to lock in a smart strategy now, not later.

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Final Thoughts: A New Era, But Same Mortgage Rules

Mark Carney brings experience, bold ideas, and a promise to tackle the housing crisis head-on. His government’s housing strategy—if successfully implemented—could reshape Canada’s real estate market over the next five years.

But until the dust settles, the rules of the game are still the same: borrow smart, plan ahead, and watch the rates.

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Why Choose Mortgage.Expert

At Mortgage.Expert, we break down complex topics like housing policy, rate trends, and government reforms so you can make smart mortgage decisions in real time. Our platform is built for Canadians who want clarity, strategy, and better options—whether you’re buying your first home or negotiating your third renewal.