The federal Conservatives have been delaying a committee vote on the Liberal government’s omnibus budget bill over the past month in a bid to help prevent a nationwide mortgage-payment crisis from occurring by 2025, says Conservative Party leader Pierre Poilievre.
Poilievre said during a press conference in Ottawa on June 5 that he believes the federal government’s Budget Implementation Act—or Bill C-47—will lead to “$60 billion of inflationary deficits.”
“We think it’s a crisis,” Poilievre told reporters.
“We think that what is going to happen if we do not get inflation and interest rates under control now, that in 2025, 2026, 2027—when this massive bubble of mortgages comes up for renewal—they’re going to be hit with higher interest rates and we’re going to have massive bankruptcies.”
Poilievre said the federal government should be outlining a plan to set a fiscal environment in which the Bank of Canada can bring down its key interest rate, which it has increased by 4.25 percentage points since March 2022 in a bid to bring down high inflation rates.
Poilievre acknowledged that his party doesn’t think it is “realistic” to ask the Liberal government to completely remove its federal carbon tax, but said that asking Ottawa to cancel any planned increases to the tax in the near future would be a “reasonable compromise.”
“We will continue to fight for these two demands: a plan to balance the budget to lower interest rates and inflation and no new carbon tax hikes,” Poilievre said.
“If the government does not meet these demands, we will use all procedural tools at our disposal to block the budget from passing.”
Liberal MP Kevin Lamoureux, who is the government House leader’s parliamentary secretary, recently called the Conservatives’ delay of the budget act vote “shameful.”
“I find it shameful and disgusting how the Conservative Party continues to play the role of a destructive force on the floor of the House of Commons,” he said on June 2 in the House.
Mortgage Payment Hikes
Poilievre’s comments come shortly after the Bank of Canada said in its annual Financial System Review on May 18 that average mortgage-payment rates could spike by up to 40 percent by the 2025–26 fiscal year, by which time most fixed-rate mortgage holders will be facing renewal with higher interest rates.
“In 2026-2027, all the mega mortgages that people took out in 2021 and 2022 will come up for renewal,” Poilievre told reporters. “And we can have people with million-dollar mortgages that are hit with three and four percentage-point increases in their interest payment on those mortgages.”
“That’s $30,000 or $40,000 a year, which could potentially lead to a meltdown in the mortgage market.”
The central bank’s report addressing the matter acknowledged this point, saying that most fixed-rate mortgage owners will see an average monthly payment increase of between 20 and 25 percent upon renewal in the 2025–26 fiscal year, which it said could force them to “increase their payments by approximately 40 percent to maintain their original amortization schedule.”
The central bank’s governor, Tiff Macklem, said during a news conference on May 18 that Canada is in the midst of a “transition period” in which higher mortgage rates will become the norm.
“Nobody should expect that interest rates are going to go back down to the very low levels that we’ve seen over the last decade or so,” he said.