How Credit Unions are Helping with Housing Affordability

Housing Affordability - Credit Unions

How Credit Unions are Helping with Housing Affordability

Housing Affordability - Credit Unions

Hoping to be a homeowner this year, but are questioning if you can cover the rising price tag? You’re not alone. It’s no secret that housing prices in Canada have skyrocketed in recent years, making the prospect of owning your own home seem more of a luxury than an attainable reality for Canadians. Along with homebuyers, renters are also feeling the squeeze on their pocketbooks, with the cost of renting in major cities such as Toronto and Vancouver becoming more costly than ever before. At its core, affordable housing is one of life’s necessities, but right now, it appears to be a long-term goal that many Canadians fear they may never reach.

In an ideal world, you should allocate 30% of your monthly budget to pay your rent or mortgage, but in two of Canada’s most costly cities – Toronto and Vancouver – that number is much higher. For example, Vancity Credit Union reports that in ‘Metro Vancouver, the average property now requires more than 48% of average monthly income.’

During these high-priced times, many are turning to financial institutions for support – that’s where Canada’s credit unions come in. Credit unions across Canada are making great strides to ensure members have access to affordable housing and the financial fortitude to keep afloat in these turbulent times. From offering competitive rates on variable and fixed mortgages to repayment flexibility and innovative strategies to unlock a path to homeownership, credit unions are doing their part to build avenues of entry for residents in the Canadian housing market.

Here are a few ways credit unions are helping to address housing affordability in communities across Canada:

Western Canada

Vancity’s Affordable Housing Accelerator Fund

Buying a home in one of the country’s most expensive cities may not be in the cards for everyone. Rentals in Vancouver have seen a price increase of 30% in 2021, with 117,000 households needing assistance to cover the rent of their home. Ultimately this rising price tag for Vancouver renters has swiftly made British Columbia one of the most expensive provinces to live in Canada. With that said Vancity Credit Union is committed to making a change and forging a more affordable path forward for Canadians.

In 2021, Vancity joined forces with the Vancity Community Foundation to deliver the Vancity Affordable Housing Accelerator Fund – a program to support affordable housing development projects across B.C. The accelerator fund helped build 4,407 affordable rental homes in 2022, offering access to reasonably priced housing to many community groups such as single parents, seniors, people with disabilities, and members of Indigenous communities, and providing 81 financial loans to community organizations to make Vancouver more affordable for all Canadians.

Community Savings Credit Union ‘Rent-to-Own’ Program

Is the rising cost of living getting you down? Community Savings Credit Union could be the solution Vancouver residents have been searching for. In 2021, the credit union partnered with Cascadia Green Development to launch the ‘Rent-to-Own’ program. This innovative pilot program was designed to address housing affordability concerns in Vancouver and bring the dream of homeownership back to Canadians hoping to break into the housing market. After constructing the mixed-use development INNOVA, the credit union designated 8 residential homes in the area for Canadians looking for but unable to own a property. Through this project, qualifying Canadians could rent one of these homes in the development and pay market rate rent for 24 months, and those rental payments would go towards the down payment for this future home. Simply put, Community Savings Credit Union’s ‘rent-to-own” program is putting the hope of housing affordability back on the table for Vancouver residents!

Central Canada

Assiniboine’s Community Financial Centre

With the rise of inflation, the residents of Manitoba, especially in the Indigenous community in Winnipeg, have become increasingly challenged financially to make ends meet. Thankfully, Kinew Housing – a valued member of Assiniboine Credit Union’s Community Financial Centre (CFC) – stepped in to help support the Indigenous community in Winnipeg. As the nation’s first Indigenous-led, non-profit urban housing corporation, Kinew Housing focuses on offering affordable housing to Indigenous people in the city.  Recognizing the challenges facing institutions in lack of access to capital to provide subsidized housing options for residents, Kinew’s successful partnership with Assiniboine Credit Union has helped them to offer subsidized housing to more than 400 low-income Indigenous families in Vancouver, allowing them to live comfortably and work to get on the right financial footing to buy their first home over time.

Meridian’s Family and Friends Mortgage

Qualifying for a mortgage can be a strenuous process. Lenders will thoroughly review your finances, run a credit check, and ask for other personal information before determining your eligibility for a mortgage. This financial analysis will help the lender determine how high your mortgage will be, along with your monthly mortgage rate and interest.

Need a helping hand to buy your dream home? Make your path to homeownership a family affair with Meridian’s Family and Friends Mortgage! If you have family who wants to help you buy a home or if you’re a multi-generational family living together, Meridian’s Family and Friends Mortgage is a convenient way to ease the financial burden of your home purchase. This plan is very adaptable because not everyone who shares the mortgage is required to move in, rather, only one owner needs to live there. But not so fast – it’s important to recognize that while not all members who purchased the home must reside in it, everyone must be liable for the mortgage. This can be done by developing a legal agreement outlining that all names on the mortgage must make equal contributions to the home purchase. Ultimately, this mortgage option is a great way to keep the home in the family, especially in instances when two incomes may not be enough to cover the cost of the home.

Kindred’s Affordable Housing GIC

Waterloo’s housing market is facing an affordability crisis. With the lack of housing projects in this region, the competition among Canadians to grab what’s available is drastically increasing housing costs and rent prices in Ontario. With the cost of living rising every day, members of the Waterloo community are left questioning what they can do to bring affordable housing back to Canadians.

In 2022, Kindred Credit Union partnered with Waterloo Region Community Foundation (WRCF), to launch the Affordable Housing Guaranteed Investment Certificate (GIC). The GIC is a benefit that provides lending for long-term, owned, or permanent rental affordable housing for residents in the Waterloo region. Want to know how it works? Well, once the GIC establishes a pool of deposits from credit union members, Kindred will allocate these funds towards loans for suitable affordable housing projects, including the adaptation of current buildings and the construction of new ones. By employing this approach, the credit union is providing something critical for residents of Waterloo – an affordable solution to renting or owning a home.

Eastern Canada

Atlantic Credit Unions’ Participation in the FLEX Program

Safe and affordable housing plays a key role in Canadian’s mental health and our economy’s growth. Motivated by the desire to build a more affordable society, Atlantic credit unions participate in the FLEX affordable lending program offered by Canada Mortgage and Housing Corporation (CMHC), a housing initiative that allows the credit unions to lend a higher percentage of funds for construction costs to private landlords planning on instituting affordable housing projects. Atlantic credit unions have also been active in providing housing at rental rates below market rate and granting loans to finance new construction projects, two of which were approved in 2020.

The Battle for Affordable Housing isn’t over, but Credit Unions are Here to Help

From rising rental prices to bidding wars, finding access to affordable housing can feel like a daunting task. But remember, you’re not alone. Credit unions are a great financial option to help you find affordable housing tailored to your unique financial needs. Credit unions continue to make great strides to make housing more affordable for Canadians, but we recognize we have ways to go. If you are struggling to cover your monthly rent or feel unable to cover the mortgage on the home of your dreams, remember to speak to a financial advisor at your local credit union for help building a financial plan toward a more affordable future. Not yet a member? Find your nearest credit union here.