Our country badly needs a new strategy to promote economic prosperity through a shift in lending and borrowing from mortgage loans to business loans. This is crucial regardless of whether you care aboutThe largest part of the Canadian economy is driven by real estate, rental and leasing, which includes mortgage lending and borrowing in owner-occupied homes, sales by real estate agents, revenue from rental fees and more.
Given that average home prices in Canada have increased by more than 300 per cent since 2000, it shouldn’t surprise anyone that real estate has grown as a share of GDP in all provinces over the past two decades, and often has been the fastest growing part of provincial economies.
Meanwhile, homeowners like me gain equity in a way that drives worrisome wealth inequalities between owners and renters, and between older and younger residents. All the while, younger people and newcomers struggle to earn enough from full-time work to pay for their primary cost of living – housing. In 1976, it took five years of full-time work to save a 20-per-cent down payment. Now,So we must revisit the place of real estate in our economic strategies.
It also means we must incentivize a shift in lending and borrowing away from mortgage toward business loans. Governments could collaborate with financial institutions to loosen lending terms for business in part by focusing on groups that face systematically more restrictive borrowing conditions, includingPolicies that work to reduce such biases may encourage business lending to marginalized groups without dramatically increasing credit risk for lenders.