Builders blindsided by CMHC move to block popular mortgage scheme

Canada Mortgage and Housing Corporation has moved to block investors from trying to bundle together single-family home purchases in order to access cheaper commercial mortgages. CMHC had previously allowed the bundling as a way of encouraging the building of rental housing. But some say the change banning the practice may mean millions of dollars of planned housing will now struggle to find financing.

At the end of February, the CMHC began advising lenders and stakeholders that it would no longer approve any applications to its Mortgage Loan Insurance Select (MLI Select) program if the required minimum five units of rental housing were not in the same building and on the same lot. Previously, a variety of single-family detached, semi-detached and townhouse homes that were adjacent to one another purchased as one package were among the 206,157 units that generated $47-billion in “insured volume” for the program in the first three quarters of 2024. (Full-year data has not yet been released, but that dollar volume jumped 59 per cent from the same period in 2023, and the number of units insured rose 31 per cent).