Canada Begins Real Estate Developer Bail Out With 55 Year Loans

Canada’s record population growth combined with slowing new home construction might seem paradoxical at first. The Government of Canada (GoC) claims it’s because housing is “illegal” but a confidential memo sent to lenders indicates it’s an issue of leverage. The CMHC quietly notified lenders they’ll be extending the maximum amortization, or length of repayment. The developer bailout will help borrowers repay their loan over two generations, with projects at risk of default now able to extend their repayment term up to 55 years.

Canadian Multi-Unit Mortgage Loan Insurance Program 

In a “protected” class document sent to lenders, the CMHC presented changes and timelines for its Multi-Unit Mortgage Loan Insurance (MU MLI) program. The MU MLI is the only mortgage insurance program for multi-unit residential housing, de-risking lenders with the state assuming the default risk. The capital for this program is typically raised via investors, but earlier this year the GoC began borrowing money to buy these bonds, setting a cap of $40 billion for 2024. The latest Budget proposes raising that cap to $60 billion, since investors have been pulling back from Canadian exposure at a record rate. 

Despite the housing minister’s claim that Canada needs to “legalize” housing, the insurance changes indicate that’s not why new housing has slowed dramatically. It’s due to excessive leverage, which the agency is seeking to address with… drumrolls… more leverage!

Canadian Taxpayers To Back Mortgages Up To 55 Years Long

These changes are rolling out in two specific segments, with the first being new market projects. “CMHC is extending the maximum amortization period at initiation for new construction market projects from 40 years to 50 years,” reads the update, which goes into effect June 24, 2024. 

Canada isn’t just using new leverage to help newer projects continue with inefficient costs. The credit injection is a part of a bigger shift, trying to mitigate delinquencies from occurring.

The agency changes continue, “In addition, for the purposes of re-amortization as a default management tool, the maximum amortization period will be extended from 40 years to 50 years for loans approved under Market MLI and up to 55 years for loans approved under MLI Select.”  

Yes, up to 55 years. There’s a whole host of issues here, but let’s stick to some of the more obvious ones. 

A Short-Term Solution That Creates Much Bigger, Long-Term Problems

Introducing more leverage doesn’t help with inefficient project fundamentals, it makes them more inefficient. Virtually every central bank has produced research showing that more credit only lowers costs temporarily, but those costs now have less friction to grow. This makes it even more expensive in the long run, and since the same labor and materials compete for housing, it will drive the cost of housing higher. 

That may or may not occur before a correction, but ultimately this isn’t an affordability measure so much as a bail out, without regard to the secondary and tertiary impacts. 

An amortization that runs for a half-century is also problematic as a risk down the road. While there are well built brick homes that last 100 years, the reality is that buildings become functionally obsolete much more quickly without significant renovation. The most efficient use of land changes, characteristics of neighborhoods shift, and/or the building becomes so cost ineffective to renovate. A lot can happen during 50 years, the span of two generations. 

Researchers found the service life of most buildings to be shorter than the actual theoretical value. Residential housing has an average lifespan of 50-60 years, meaning many buildings will have an average lifespan shorter than the actual mortgage. 

The government itself estimates a useful life for social and affordable buildings five-stories or less to be just 42 years on average. You thought people who buy a fleet car with a service life of 6 years and a payment plan for 8 years were dumb? In Canada, taxpayers are backing mortgages for multi-million dollar residential buildings with an expected life shorter than the useful life. 

All of this highlights the poor & opaque planning conducted by policymakers when it comes to housing. Short-term solutions are adopted at the expense of real solutions, while they’re sold as the exact opposite of what the public needs, and are being told. 

Rather than improve affordability, this is largely a developer bailout to reinforce land values. Which makes sense when the same policymakers state they were never trying to improve affordability, they were trying to maintain home values to fund investments



We encourage you to have a civil discussion. Note that reads "civil," which means don't act like jerks to each other. Still unclear? No name-calling, racism, or hate speech. Seriously, you're adults – act like it.

Any comments that violates these simple rules, will be removed promptly – along with your full comment history. Oh yeah, you'll also lose further commenting privileges. So if your comments disappear, it's not because the illuminati is screening you because they hate the truth, it's because you violated our simple rules.

  • Reply
    Ron Bruce 7 days ago

    Researchers found that most buildings’ service lives are shorter than their actual theoretical value. Residential housing has an average lifespan of 50-60 years, meaning many buildings will have an average lifespan shorter than the actual mortgage.

    Do developers, property flippers, or both run the CMHC? Maybe we should ask the banks caught in money laundering to see if they are part of the gang.

    • Reply
      Jason Chau 7 days ago

      The CMHC has been operating for almost a year without an official CEO. It’s a slush fund for donors, like infrastructure bank (also under the same dept).

  • Reply
    Trader Jim 7 days ago

    Remember the gov is borrowing in public markets to finance these purchases, it’s not occurring through the Bank of Canada expanding monetary policy.

    RBC has said the government’s EXCESSIVE deficit spending is driving the yield higher, so the cost of borrowing for EVERYONE, including mortgages, businesses, and the government itself.

    Fewer services to bail out the developers, kids. That’s in addition to the billions they’re spending directly to “help” affordable housing where the price shouldn’t get cheaper.

    • Reply
      Jason Chau 7 days ago

      The unfortunate part of all this is no government is looking to do anything different. The political nutters are focused on which team they grew up with, and have been trained to bark whenever someone brings up predatory action by explaining everyone would steal from taxpayers!

    • Reply
      Abe Heuchert 7 days ago

      It seems no matter where I go my real estate holdings go up in value. Trudeau has indicated he wants to see people’s home values go up and make housing more affordable. Stretching it out to 99 yrs on these types of projects will lower the principle portion of the payment but that combined with lowering mortgage rates will make the housing market explode again. Especially in the interest rate sensitive markets such as Alberta where more young families with children are moving as opposed to the investor property flipper markets in BC and Ontario. Although I have seen a definate change in the types of people coming here to take advantage of the Alberta advantage which will eventually make our market a much more speculative one than it has been in the last 10 yrs. I remember crazy multiple offer market in Edmonton in 2006 or thereabouts when BC market was stagnant.

  • Reply
    Omar 7 days ago

    Has OSFI commented on this yet? I don’t even understand how this is going to work with Basel III risk costs.

  • Reply
    Gal Weiss 7 days ago

    No one wants to say it, but when a country is talking about guaranteeing multi-generational loans, it’s approaching a credit bubble so large it requires the collapse and re-issuance of new currency.

    Trawl through the archives of what was happening before the Euro. It wasn’t about universal movement (which the UK had without adopting the currency), it was about refinancing the collapsing currency of trade partners.

    • Reply
      Steve 7 days ago

      I lived in Tokyo 35 years ago
      50 and 100 year mortgages were the answer to sky high housing costs
      I think they are still feeling that pain

    • Reply
      Matt Wilson 6 days ago

      The author of this article need to take an economics 101 course. More supply = lower prices for renters and buyers. We need a residential construction boom in Canada. Yes, construction costs will increase with more construction. This will mostly be due to higher wages to the skilled and unskilled workers who are building the homes. (A good thing for the workers) But that’s no reason not to build more homes. There is nothing wrong with a 50 year amortization for an asset that will last for 50 to 100+ years.

      • Reply
        Gal Weiss 5 days ago

        It’s cute when people claim someone needs to take an economics course, but clearly have never taken one themselves.

        State intervention to support inefficiencies leads to more inefficiencies and shortages. There’s a reason the first $40b this year we spent didn’t create more projects, it led to fewer starts despite already benefiting from cheaper fixed yields.

      • Reply
        MaryJay 5 days ago

        No, look at what handing over housing to developers and investors over the last 40 years has done. They commodified and monetized housing and in some place the tiny substandard condos are going to have people paying mortgages until these crappy things fall apart. AND they’ll have no savings for retirement. CMHC should only be lending money to the non-profit sector. Unfortunately, they killed all of those programs years ago and a lot of the knowledge with it.

        • Reply
          Abe Heuchert 5 days ago

          There should be two building programs. I highly subsidized one by nonprofits with billions of dollars put into them to supply the much-needed affordable and I mean truly affordable housing based on income. Like it used to be. Would be a lot more used useful than pumping 40 or 50 billion dollars into potentially defunct battery plants all over Ontario. On top of that there should be incentive given to the private sector to create housing also. We need lots of it like we never have ever in the past as the floodgates are wide open for migrants and immigrants of all sorts from all over the world. And it takes years to train these people if they can be trained to be house builders. Or some sort of skilled trade needed in the home building industry. You can’t turn a fast food worker into a carpenter overnight.

    • Reply
      Pete Ox 6 days ago

      Agreed. You could learn to build your own home in less than 50 years. Personally would love to see communities band together their expertise and time to raise homes for each other.

    • Reply
      BP 5 days ago

      Go on….

  • Reply
    Tia Wolfe 7 days ago

    Working hard to pay taxes so Ukraine can be sovereign and developers can be profitable. #blessed

    • Reply
      Yuri Hohol 7 days ago

      And where are you from? Don’t tell me _ Moscow…just stirring it up in the west as per Vlad’ s instructions. There will be an extra 5 roubles bonus this week for “engagement”!

      • Reply
        Tia Wolfe 5 days ago

        Because we should support funding overseas wars while our own country is a shit show, or you’re a tankie? Damn, people are dumb.

        • Reply
          MaryJay 5 days ago

          In case you haven’t noticed, the world is an incredibly complex, integrated place where a ping in one place can and often does reverberate in multiple places around the world. Some of the concepts that we value are under attack by autocrats, plutocrats and oligarchs who, if successful, will undermine the global reserve currency which would be economic chaos for large parts of the world, but also send a message that sovereign borders mean nothing. Read some history to see why these things matter and that thinking small won’t save us. And don’t forget Levi Straus’s saying “The denial of complexity is a form of tyranny.”

      • Reply
        Abe Heuchert 5 days ago

        Russia will win because they have more people and are paying $2000 to $3000 USD equivalent to people of all types and ages to go to the front and kill Ukrainians. These recruits are used to making 1/10 of that. Plenty of incentive for anybody stupid or immoral enough to go. In Ukraine they are down to 70 year olds and young teenagers rounded up and sent to the front. They are not volunteers and do not get incentive pay. They just get ground up like hamburger. Russians are only recruiting 60 and 15 yr olds. Millions have left both countries to hide in SE Asia and anywhere else that will take them. Canada should open its doors to an unlimited number of Russian and Ukrainian refugees asap instead of taking in millions of outcasts coming for economic reasons. Last time I looked India and the Philippines were democracies so why are we even taking any in at all from these places? Russia and Ukraine should be our main focus.

      • Reply
        Sergey 4 days ago

        Yura, why are you still here? Hiding from getting enlisted? You guys seriously ruined our Soviet Ukraine. Thankfully, I have not been in Ukraine for the past 32 years to see this but has enough information form relatives to know what banderits have done.

  • Reply
    Mortgage Guy 7 days ago

    Same document also lowered incentives for green development & accelerated developments on contaminated sites.

    So much for the narrative Canada’s current government is on a spending spree to save the world.

  • Reply
    Haijan Singh 7 days ago

    What I’m confused by is why so many people are convinced the low wage workers imported will be a net contribution to the tax system.

    At their income level they pay little to no taxes, but we need to helicopter funds to build housing so they can spend whatever little money they made on rents?

    It’s a grift supported by junk economics.

    • Reply
      Kaylin 7 days ago

      Yup. The $100k in boosted home values was less than the taxes I spent over 3 years, and honestly my household income isn’t impressive. It’s barely enough to afford my home comfortably.

      • Reply
        PT 7 days ago

        Have you considered getting a job as an MP? The Finance minister went from a co-signed mortgage to a global portfolio of investment properties.

        Being a humble civil servant pays.

  • Reply
    Ray Blanchard 7 days ago

    I certainly don’t deny that the bank of Canada and our federal governments are all running a debt based ponzi scheme that will eventually blow up.

    I’m a real estate developer, the one thing in your article that makes no sense is that buildings only have a useful lifespan of 40-50 years.

    I know of dozens of apartment buildings in my city that were built in the 1960’s that are still full and show no sign of being obsolete. Their lifespan is likely closer to 100 to 120 years, maybe more.
    In Europe some buildings have been standing for hundreds of years!!

  • Reply
    [email protected] 7 days ago



  • Reply
    Ander Snorok 7 days ago

    Another liberal ponzi scheme that will end in tears.

  • Reply
    MaryJay 7 days ago

    This is stupidly outrageous. Once upon a time, CMHC fronted money to non-profits who built quality coops and rentals and if they were managed well are still thriving today. But Paul Martin nixed those programs in 1993 and the neo-liberal idea that the market would provide took off not just in Canada but around the world. The result has been the commodification and monetization of housing that is making a huge swath of the population the equivalent of feudal wage slaves. They will never pay off their massive mortgages AND be able to save for retirement. Another result was the eradication of non-profit builders and that particular knowledge. Almost everyone has drank the cool-aid that due to land and permit costs these dwellings had to get smaller, the amenities non-existent and the prices wholly disconnected from local and national economies. We have handed over housing to a group who don’t give a damn about livability and NONE of these developers live in the buildings they are flogging. The fact that taxpayers will be paying for the risks of these people is really at the heart off neo-liberalism which, when you scratch the surface is driving people towards populists–who are just as short sighted and a lot more fascist. And the Conservatives are no different.

  • Reply
    Maik 7 days ago

    Why are we bailing out billio dollar developers instead of offering 55 year mortgages to individuals?
    Same old same old, bail out bilionairs that aren’t able to manage their business, while individuals have to foreclose with skyrocketing interest rates for their 5byear mortgages.

  • Reply
    Balter 7 days ago

    The State aka
    The Taxpayer

  • Reply
    [email protected] 6 days ago

    Sales in Metro Vancouver have not been this low in over 22 years. Back then – we were buying and selling townhouses and condos in the 75k and 125k range. Interest rates were about the same.
    Prices are at least a million dollars too high for what you are getting in Metro Vancouver.

  • Reply
    Alan Ventura 6 days ago

    This sounds interesting

  • Reply
    Adam 6 days ago

    This is called financial slavery. This mortgage is longer than many people live. This system is unsustainable.

  • Reply
    Hardy 6 days ago

    Where is the 100 year mortgage for home buyers?

  • Reply
    Chrid 6 days ago

    Am I missing something? This is for developers only and will help with financing and encouraging building… It’s extended amortizations for loans on SUPPLY.

    • Reply
      Han 5 days ago

      Yes, because supporting inefficient non-market policies will support one project but make the rest not feasible.

      There’s a reason the gov’s helicopter money is lower the amount of supply to market, not increasing.

      Just like placing price caps don’t help lower prices, they create shortages.

  • Reply
    Triple B 5 days ago

    This looks and tastes like Japan 1994. 50 year mortages, $1M houses. Shoe box apartments 300 sq ft renting for thousands of dollars. Japan is only now coming out of this. Tens of thousnds abandoned houses, that cost to much to bring up to todays standards.

  • Reply
    Sergey 4 days ago

    Housing is a basic human need and should be planned and provided by the state and approved by state private constructors for reasonable profit and at reasonable affordable prices to population. Once it is transferred to private interests and turned into investment it is going to rise in value and price practically separated form realities of life as we have seen. It is liberal capitalistic policies at their best. If it continues things are going to get out of control completely and will undermine Canada future.

  • Reply
    [email protected] 4 days ago


  • Reply
    Richie Varing 2 days ago

    It’s Alway Working Class People “who are trying to raise their families or trying to get by-by paying their day to day expenses by Working hard” get Burned!

    Richest always Get Away with the Murder by any Means at Cost of the Taxpayer’s Money with the help of the Governments or- & Institutions.

    Q. Why can’t Government let these Builders go “Bankcrupt” And let Big Institutions “Loose their Money” by keeping the Amortization for the Same Period of Time?

    So this way Someone else will Buy these Bankrupt Project at the “Cheaper Price” Finish it and Sell it to the Public at “Cheaper Prices”.

    So the Government can Help the Average People “at the Cost of Big Builders and Big Institutions Money”who has been Making Tons of Profits up Until Now!

    Instead of Bailing them Out & Protecting Institutions Money “at the Cost of Taxpayer Money”!

    But the Government Do Not Want to Do that. Because they gets Lots of Funding from these people Legal & Illegal ( Under & Upper the Table) ways During and After the Election
    Do Not have any Interest “to Help the Public” Except to Get Votes by Making False Promises.

    Respect to all.

    Richie Varing

Leave a Reply

Your email address will not be published. Required fields are marked *