New GST-style benefit aims to ease budgets already stretched by housing and debt
Prime Minister Mark Carney’s new affordability package places grocery and essential costs at the centre of Ottawa’s response to a cost‑of‑living squeeze that has already hit mortgage borrowers hard.
The plan’s anchor is the Canada Groceries and Essentials Benefit, a five‑year boost to the existing GST credit for low‑ and modest‑income households.
In year one, eligible families of four are to see their annual GST payment lifted from $1,100 to $1,890, while individuals’ support would rise from $540 to $950, followed by a 25% increase to the GST rebate in each of the next four years.
“Canada’s new government is acting today to provide a boost to those Canadian families who most need one, while creating a bridge to longer‑term food security and affordability,” Carney said.
“One of the best things about Canada is that you don’t have to be born rich to succeed. To protect that fundamental value, we are building a stronger economy that benefits everyone… We’re also bringing in new measures to lower costs and make sure Canadians have the support they need now.”
For existing borrowers, that meant more room in the monthly budget for food and basics, and a bit more resilience when rates or other costs rose. Even modest relief on essentials could help households avoid turning to higher‑cost credit.
Helping would‑be buyers save and qualify
For hopeful homebuyers, especially first‑timers, the measures effectively shift some pressure away from grocery bills and toward savings.
Extra rebate dollars could be redirected into down payment funds, closing costs, or high‑interest savings rather than being swallowed entirely by rising food prices.
Over time, slightly lower non‑housing expenses could also support stronger debt‑service ratios, improving the chances of passing lenders’ stress tests.
For mortgage professionals, the announcement comes as households are already under growing financial strain. A national survey highlighted that many mortgage holders could only maintain their lifestyle for less than six months if their main income disappeared, with nearly half saying the current economic climate damaged their personal finances.
According to a TD survey, 67% of Canadians plan to cut back their spending this year, up from 51% a year earlier, and nearly six in 10 expected to trim monthly budgets by as much as $1,000.
Moreover, a new analysis from Rates.ca highlighted five everyday expense categories likely to climb this year, led by mortgage renewals, home and auto insurance, and higher costs for essentials such as food, transportation, and services.
Financial stress has climbed sharply since 2021 as more households devoted most of their paycheques to basic needs, including housing, groceries and transport.
Stabilizing food costs and inflation risk
The capital funding for food producers and supply‑chain investments – including the $500 million Strategic Response Fund allocation and the Food Security Fund – aims to expand capacity and improve productivity.
If those measures succeeded, they could help temper food inflation over the medium term. More stable grocery prices would support headline inflation coming down, which in turn could give central bankers more room to cut or at least hold rates, an obvious positive for mortgage borrowers.
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
