What a fourth federal Liberal term means for your finances
With files from Brooke Thio and Alyssa Prizzon.
The votes have been tallied, and it’s official; Canada’s federal election has resulted in a minority Liberal government, with Prime Minister Mark Carney remaining in his post and sweeping the party into a fourth consecutive term.
A career central bank economist – having acted as Governor for both the Bank of Canada and Bank of England – this is Mr. Carney’s first stint holding political office, after running a campaign that squarely challenged U.S. President Donald Trump’s efforts to destabilize Canada’s economy.
In a resolute victory speech, the newly-(re)minted Prime Minister bluntly outlined the trade and protectionism threats emerging from our southern neighbours, saying today is a crucial “hinge” moment in history, similar to before the second World War.
“Our old relationship with the United States, a relationship based on steadily increasing integration, is over,” he stated to an Ottawa-based audience.
“The system of open global trade, anchored by the United States – a system that Canada has relied on since the Second World War, a system that, while not perfect, has helped deliver prosperity for our country for decades – is over.
“As I’ve been warned, America wants our land, our resources, our water, our country. But these are not idle threats. President Trump is trying to break us so that America can own us. That will never, that will never ever happen.”
This approach clearly resonated with Canadian voters, who’ve endured Mr. Trump’s escalating trade war, and resulting market volatility, for months. With Mr. Carney now officially elected into the hot seat, however, the real test begins as he inherits what’s to be a sluggish economy, and looming recession.
Even as Canada has dodged most of Mr. Trump’s initial tariff threats (though 25% levies persist on non-CUSMA-compliant goods, the auto industry, and steel and aluminum products), we will be impacted by the 10% tariffs placed on other countries, as well as the U.S.’s 145% tariff on China. An economic downturn in the States also spells bad news at home, given the effects on the Canadian dollar and exports.
Preventing economic damage has been a key focus for the federal Liberals during their campaign, offering a platform full of support for Canadians. Here’s how your bottom line may be impacted.
The housing market
Home affordability is one of the most acute issues facing Canadians, and was a keystone of the Liberals’ campaign, especially efforts to boost building and rebalance supply. According to the Canada Mortgage and Housing Corporation (CMHC) the nation faces a gap of 3.5 million homes, which must be built by 2030 in order to improve affordability.
To address this, the Liberals have pledged to create “Build Canada Homes”, a new federal entity that will focus on affordable housing by easing investment, financing and building conditions for developers. This will include a $10-billion infusion into financing for builders creating affordable housing, including for seniors, veterans, and other vulnerable groups. The BCH will also provide $25 billion for the building of pre-fabricated homes, prioritizing Canadian materials such as mass timber and softwood lumber.
What’s especially interesting about the BCH, however, is that it will also act as a developer, bringing the federal government back into the creation of affordable housing, to be built on public lands. This harks back to the post-world-war two era, when the CMHC – a taxpayer-backed Crown Corporation – rapidly built housing to accommodate returning Canadian soldiers and a booming population.
The feds will also incentivize the creation of new rental housing with a tax incentive for builders called the Multi-Unit Rental Building (MURB), similar to the program that ran in the 70s, when much of today’s purpose-rental stock was built.
There will also be increased efforts to streamline housing bureaucracy, such as halving municipal development charges for multi-unit residential builds for five years, and easing zoning restrictions and red tape to speed approvals. Part of this will be due to the adoption of “designs-as-of-right” – pre-approved home designs – that will allow reputable builders to fast-track their projects.
On mortgages
While much of the Liberal's housing focus is on supply, they will continue the previous government’s commitment to assess Canada’s mortgage industry and explore how to make longer-term products –such as 10-year fixed terms – a possibility. While not currently a popular option in Canada, increasing access to these types of products will offer some consumers decade-long stability. But, the government will have to examine how these longer terms can be funded and offered from a broader pool of lenders for it to be considered a viable option for borrowers.
The Liberals’ heavier projected fiscal deficit – which could rise amid a minority government – could also mean fewer rate cuts in the future from the Bank of Canada, as more money injected directly into the Canadian economy means the BoC doesn’t need to lean as hard on monetary policy to add stimulus.
In an analysis released the morning after the election outcome, Desjardins economists Jimmy Jean and Randall Bartlett write that longer-term bond yields are ticking up, in expectation of higher debt levels as more bonds will need to be issued to meet the Liberals’ election promises.
“At the time of writing, Government of Canada yield curve has steepened following the election victory, likely in anticipation of greater issuance to meet election commitments. We expect funding needs to be met by proportionately greater issuance of short‑term debt and 5‑ to 10‑year Government of Canada bonds. The Canadian dollar depreciated slightly on the outcome,” they write.
Jobs, debt, and the cost of living
While the Buy Canadian movement is helping the domestic economy, consumers continue to fear increased prices and a recession as the trade war stretches on. Canadians are already taking on more debt than before, especially among younger and lower income groups.
The Liberals have promised to cut marginal rates for the lowest income tax bracket by 1%, which would save dual-income families up to $825 annually. In addition, the party will expand dental coverage to Canadians aged 18-64, saving around 4.5 million Canadians $800 each. However, this won’t change the rate of inflation or risk of job losses.
Reducing interprovincial trade barriers is one way to make goods more affordable and accessible: the Liberal government promises that removing barriers to internal trade will reduce internal trade costs by up to 15%. Furthermore, it will seek mutual recognition of credentials with provinces and territories to enable Canadians to work across the country.
As well, for workers whose jobs are vulnerable to US tariffs, the Liberals’ $2-billion Strategic Response Fund promises to protect manufacturing jobs and support workers to upskill their expertise in the industry, in addition to boosting the auto sector’s competitiveness.
Overall, the Liberals’ fiscal plan of “spending less, investing more” includes using $150 billion to generate $500 million in new investment in housing, defence production, trade and transportation infrastructure, digital innovation and patents, critical minerals and energy, and other sectors that offer jobs with higher demand and better pay.
Climate change and insurance
Wildfires, flash floods, and hailstorms have become destructive across Canada, driving up insurance premiums. The Liberal Party outlined several strategies to help ease severe weather-related costs, which could reduce home and auto insurance premiums.
The Insurance Bureau of Canada (IBC) revealed 2024 was one of the most expensive years for insured damage in Canadian history, totalling $8.5 billion. Of the total, the Jasper wildfire caused $1.1 billion in damage. The Liberals acknowledge the wildfires and propose plans to invest in Canada’s national parks, funding wildfire response teams and FireSmart programs. In addition, they plan to update building codes and standards to ensure climate-resilient construction and prevent future risks.
Regarding flooding, the party outlines plans to stop federal homes from being built in high-risk areas, preventing Canadians from facing costly damages. They will also implement the National Flood Insurance Program by April 2026, making flood insurance more accessible and affordable in Canada.
Lastly, the Liberals propose strategies to protect Canadian families from wildfires and floods by funding home upgrades, including roof repairs and replacements and sump pump installations – all of which will be funded by a reformed carbon credit market, making big polluters pay instead of Canadians.
Severe weather is a costly threat in Canada. The Liberal Party’s climate change plans have the potential to lower auto and home insurance premiums for Canadians, offering much-needed cost savings and relief.
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Penelope Graham, Head of Content
Penelope has over a decade of experience covering real estate, mortgage, and personal finance topics and her commentary on the housing market is featured on both national and local media outlets.