The 2025 federal budget included a significant expansion of the Canada Mortgage Bonds (CMB) program, aimed squarely at increasing housing supply, particularly multi-unit rentals. Beginning in 2026, the annual CMB issuance limit will increase from $60 billion to $80 billion, with the incremental $20 billion dedicated solely to CMHC-insured multi-unit rental projects.
This policy shift was reflected in CMHC’s recently announced Q1 CMB issuance targets. Issuance for 5-year bonds will increase to $12.5 billion, up from $8.5 billion, while 10-year issuance will rise modestly to $7 billion from $6 billion. These targets align with market expectations and current borrower preferences. Without increasing 5-year issuance, there was a significant risk of crowding out funding for single-family housing.
CMHC has reiterated its commitment to maintaining a large and regular 10-year issuance program, recognizing the importance of maintaining the long-term investor base. At the same, it recognizes there is greater borrower demand in the multi-family space for 5-year funding. The near-term challenge will be finding sufficient 10-year collateral. In this environment, bank treasuries are likely to benefit, given the flexibility in their funding structures and the ability to use 5-year products as collateral.
While the current policy focus is on supporting multi-family projects (those with 5 or more units), there is a strong case for extending this treatment to duplexes through four-plexes. As builders increasingly shift toward “missing middle” development in the current market environment, bringing these smaller-scale projects into the multi-family framework would better support the building community. It would also help accelerate housing delivery, as these projects typically have much shorter development timelines.
Another notable budget measure is the government’s proposal to amend the National Housing Act to increase CMHC’s guarantees-in-force limit from $800 million to $1 trillion, while decoupling it from its insurance-in-force limit. While the intent may be to account for CMHC’s less dominant role in the mortgage insurance market, the change creates scope for more flexible and potentially impactful uses of its guarantee capacity.
Historically, with ministerial support, CMHC has extended guarantees beyond mortgage-backed securities, including housing-related debt issued by Quebec. This raises the question of whether CMHC could deploy its guarantee more broadly as a wrapper for more complex financing structures, effectively functioning like a financial guarantee provider. For example, in structured-financing for a housing project where the equity tranche represents the first loss position and requires a backstop, CMHC could provide a guarantee on that equity. It has already experimented with this approach in social housing vehicles, where it assumed the first-loss position.
I doubt this was contemplated in the budget, but it is worth examining how CMHC could use its expanded guarantee authority more strategically to support housing delivery, particularly for projects that struggle to attract private capital due to perceived risk rather than underlying fundamentals.
Housing Affordability Watch
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Independent Opinion
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