Bank of Canada increases policy interest rate: CORPIQ Expresses Its Concerns

MONTREAL, July 13, 2022 - The Corporation des propriétaires immobiliers du Québec (CORPIQ) is concerned about the successive effects of the increase in the Bank of Canada's key interest rate, announced today, on the Quebec real estate market. Although this measure is intended to curb inflationary pressures in the economy, this decision will have a direct impact on the ability of rental unit landlords to invest in the maintenance of their rental housing stock and, above all, to stimulate the construction of new housing units in a context of real estate market imbalance in several regional cities in Quebec.

"With a low vacancy rate in several regions of Quebec and an aging rental housing stock where 2/3 of the buildings are over 40 years old, the increase in the Bank of Canada's key interest rate will have a direct impact on the financial capacity of rental housing owners to maintain their buildings and to invest in the construction of new units to meet the growing demand. Obviously, this will have an unfortunate upward effect on rental prices. Inflation is affecting our members and the banks' interest rate hikes are significantly reducing the flexibility of landlords to invest. We quickly invite the governments to study the best fiscal strategies to mitigate the effects and specially to stimulate the construction of housing under several formulas by intensified programs", explained Mr. Marc-André Plante, Director, Public Affairs and Government Relations.

 

CORPIQ survey (July 2022)

In the last few days, CORPIQ has conducted a survey of more than 1000 rental landlords across Quebec to find out the impact of rate increases. Quebec landlords are very concerned about the share of interest payments in their annual budget, which continues to grow, so much so that 30% of landlords intend to reduce future investments in renovation.  The level of borrowing and the type of borrowing leads to a situation that is worrisome, since:

     1. 52.5% of the value of the landlords' mortgage portfolio is at a variable rate;
     2. 60% of landlord mortgages still have a mortgage balance of more than 50%.

Let’s recall that a recent study by the Canada Mortgage and Housing Corporation (CMHC) estimates that more than 620,000 additional dwellings will be needed in Quebec by 2030 to meet household demand and ensure a balance in the Quebec housing market. Thus, there is a consensus to act now and mobilize all partners in the circumstances. Recently, Ontario mandated a study group, with experts, to reflect on the issues of the housing sector and this should inspire a similar approach in Quebec.

"It is time for action. CORPIQ is ready to collaborate with all the partners of the housing sector. Our members are part of the solution to the current housing crisis throughout Quebec. Today's increase in the Bank of Canada's key interest rate will change the outlook for the housing sector and deserves special attention from governments that want to provide a roof over everyone's head," concluded Mr. Plante.

About CORPIQ

A non-profit organization bringing together 30,000 landlords and managers who own nearly 500,000 rental units and condos, CORPIQ is the largest association to offer services to landlords and to defend their interests, for over 40 years. It serves all regions from four offices with a total of 70 employees. Quebec landlords provide housing to 1.3 million renter households, seven out of ten of which own a duplex or triplex. Rental housing represents gross annual revenues of $10.5 billion, of which $1.6 billion is returned in municipal and school taxes. 

 

Information and interview requests:

 Marc-André Plante

Director, Public Affairs and Government Relations - Corporation des propriétaires immobiliers du Québec

Phone: 514-249-1691

Email : olbell@corpiq.com