With Mark Carney leading the Liberal Party to victory in the 2025 federal election, housing is expected to remain a core policy focus — and for good reason. Carney’s approach is anchored in large-scale intervention: a blend of public-sector construction, incentives for modern housing technologies, and tax relief aimed at making homeownership more attainable. But how impactful will these promises be and what steps can current and prospective homeowners take to prepare?

Liberal Party – Main Policies

The Liberal Party’s housing platform, led by Prime Minister Mark Carney, focuses on increasing supply, lowering entry costs for first-time buyers, and streamlining the development process. Central to this plan is the creation of Build Canada Homes (BCH), a federally backed agency that will lead public-private partnerships to construct affordable housing, promote modular and prefabricated building methods for faster and more efficient delivery, and prioritize the use of federal land to ease supply constraints. To address affordability, the Liberals have pledged to eliminate the GST on new homes priced under $1 million for first-time buyers. They also plan to reduce municipal development charges through federal top-ups, helping to cut costs for builders and speed up project timelines. Additionally, the platform calls for standardizing building codes across provinces to reduce regulatory red tape and simplify the construction process nationwide.

Market Impacts of These Policies

While these interventions are ambitious, affordability is not just about home prices — it’s about income. As economist Kevin Milligan put it, “Never try to solve an income problem with prices.” The Liberals’ focus on supply-side solutions especially through BCH and tax incentives is a step toward addressing this imbalance, but the timeline for results may be slow.

Short-term impacts could include:

A modest increase in new home construction activity, particularly in the prefab sector.

Some downward pressure on new home prices under the $1M threshold, due to the GST exemption for first-time buyers.

Potential increase in homebuyer interest, especially in suburban and secondary markets, as affordability measures roll out.

Variable vs. Fixed Rates: What we Expect in 2025?

With policy changes likely to ease affordability but not immediately lower prices, the timing becomes personal and interest rates remain a deciding factor.

Fixed rates are guided by Government of Canada bond yields, which fluctuate based on inflation expectations, economic growth, and central bank policy. These yields had already started to fall before Carney’s election win due to global uncertainty, but with a more expansionary fiscal policy now expected, some economists anticipate mild inflation pressure — which could slow further declines in fixed rates.

Variable mortgage rates, which are tied to lender prime rates, move in direct response to BoC policy rate changes. Currently, bond futures suggest two more 0.25% cuts are expected from the Bank later this year, offering potential relief for variable-rate borrowers.

What Does This Mean for Homeowners and Buyers?

For current homeowners with variable-rate mortgages, the anticipated Bank of Canada rate cuts may offer welcome relief in the form of lower monthly payments and reduced interest costs. However, for those considering a fixed-rate mortgage, it is important to note that any potential rise in bond yields, especially amid looser fiscal policy under the new Carney government could mean that fixed rates might rise in the future.

If you are looking to purchase a home or renew an existing mortgage, now may be the right time to review your options and secure a rate hold, particularly as policy and market expectations evolve. With nearly 60% of Canadian mortgages set to renew in 2025–26, may face higher monthly payments compared to the historically low rates seen in recent years. The federal government’s recent move to allow 30-year amortizations for insured new builds and first-time buyers will help some manage these increased costs but for most borrowers, refinancing strategies must be personalized.

Stay Informed

Carney’s win signals a federal government committed to intervening in the housing market, with bold supply-side plans and targeted tax relief for first-time buyers. While implementation will take time, prefab innovation, reduced development fees, and GST exemptions mark a meaningful shift. For now, buyers and refinancers should stay informed, plan prudently, and most importantly consult mortgage professionals to time their decisions with the evolving policy landscape. Now is the time to take a strategic position! At Cultivate + Evolve Financial, we are committed to guiding you through these shifts and helping you understand their potential impact on your mortgage strategy.

References

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Department of Finance Canada. (2024, September 16). Government announces boldest mortgage reforms in decades to unlock homeownership [News release]. https://www.canada.ca/en/department-finance/news/2024/09/government-announces-boldest-mortgage-reforms.html

Forbes Advisor. (2024, December). Mortgage rates forecast for 2025: Experts predict... Forbes. https://www.forbes.com/advisor/ca/mortgages/mortgage-rates-forecast-2025/

Global News Staff. (2025, May). Mark Carney has a housing plan. How long will it take to implement? Global News. https://globalnews.ca/news/mark-carney-housing-plan-explainer-2025

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Huebl, S. (2024, September 24). Federal government releases technical details of its latest mortgage changes. Canadian Mortgage Trends. https://www.canadianmortgagetrends.com/2024/09/federal-government-releases-technical-details-of-its-latest-mortgage-changes/

Huebl, S. (2025, January 13). 60% of Canadian mortgage renewals to face higher rates by 2026: BoC. Canadian Mortgage Trends. https://www.canadianmortgagetrends.com/2025/01/60-of-canadian-mortgage-renewals-to-face-higher-rates-by-2026-boc/

Lee, M. (2025, May 13). Only Ottawa can fix what’s broken in the housing market. The Clarion. https://theclarion.ca/opinion/ottawa-fix-housing-market-2025

McAlinden, F. (2025, April 30). What Carney’s election win means for housing and mortgages in Canada. Canadian Mortgage Professional. https://www.mpamag.com/ca/mortgage-industry/industry-trends/what-carneys-election-win-means-for-housing-and-mortgages-in-canada/533903

McAlinden, F. (2025, April 30). What Carney’s election win means for housing and mortgages in Canada [JP Boutros commentary]. Canadian Mortgage Professional. https://www.mpamag.com/ca/mortgage-industry/industry-trends/what-carneys-election-win-means-for-housing-and-mortgages-in-canada/533903

Milligan, K. [@kevinmilligan]. (2025, April 19). “Good—supply-focused. Some big ideas in there.” [Post]. Bluesky Social. https://bsky.app/profile/kevinmilligan.bsky.social

Reuters Staff. (2025, April 29). Analyst reaction to Liberals winning Canada election. Reuters. https://www.reuters.com/world/americas/analyst-reaction-liberals-winning-canada-election-2025-04-29/

Written by Ruth Thakkar, Client Care Assistant and Business Management Major with a Minor in Economics at UBCO