Major Partnership Aims to Bridge Indigenous Housing Financing Gap
Vancity, one of Canada's largest credit unions, has joined forces with Indigenous-owned private credit firm Keewaywin Capital to launch a significant $100 million partnership. This collaboration is specifically designed to finance housing projects in Indigenous communities across the country, addressing what has been described as one of Canada's most severe housing gaps.
Addressing Long-Standing Financing Challenges
According to federal housing and census data, Indigenous communities face disproportionately severe housing shortages and have historically experienced more limited access to conventional mortgage financing. Tracee Smith, Keewaywin's chief executive and founder, explains that this partnership directly targets a long-standing gap in construction financing on Indigenous lands, where major banks have largely avoided lending.
"This is a company I didn't really want to have to start," said Smith, a member of Missanabie Cree First Nation in northern Ontario who spent more than a decade working in banking. "First Nations get government transfers just like any municipality in the country. So if anything, they should be considered strong credit, but that's not how it works."
Smith points to federal laws that prevent Indigenous land from being used as collateral, which has historically pushed communities toward government programs or alternative lenders rather than traditional banking solutions.
Innovative Financing Structure
The partnership features a carefully structured financing model that addresses different phases of housing development. Under this arrangement, Vancity's investment bank subsidiary will provide up to $100 million in credit facilities, covering as much as 90 percent of individual project costs. Keewaywin will handle the initial short-term construction financing, typically spanning 18 to 24 months.
Once projects reach completion, Vancity steps in with long-term mortgage financing, creating a seamless transition from construction to permanent housing. This innovative approach allows Keewaywin to focus on what Smith describes as "the riskiest phase of housing development" while recycling capital into new projects once permanent financing is secured.
Financial Details and Projected Impact
Keewaywin is targeting returns of approximately seven percent while charging borrowers roughly nine percent interest during the construction phase. Vancity's long-term loans are expected to price at about six to 6.5 percent over 20 years, which lowers the blended cost of capital once projects are completed and occupied.
Smith revealed that the fund aims to finance between 300 and 500 housing units over the next five years. The initiative has attracted significant institutional support, with investors including:
- The federal government's Canada Mortgage & Housing Corporation
- Vancity itself
- Addenda Capital
- Several family offices
Historical Context and Future Goals
Vancity has been pioneering Indigenous lending approaches since 2011, when it became the first financial institution in Canada to recognize First Nations as governments for lending purposes. The credit union has since worked with several First Nations to co-develop banking solutions tailored to their specific needs and circumstances.
Smith's longer-term vision extends beyond immediate housing needs. She aims to prove the financial viability of this model to attract larger pools of institutional capital, including from pension funds, and ultimately encourage major banks to reconsider their approach to Indigenous community financing.
"We're going to show you how to do it," Smith declared. "More money should flow into this, and everyone can make money too. No one's asking for free money here."
This partnership represents a significant step toward addressing systemic housing challenges in Indigenous communities while demonstrating that socially responsible investments can also deliver solid financial returns. The model could potentially serve as a blueprint for similar initiatives across Canada, helping to close one of the nation's most persistent housing gaps through innovative financial collaboration.
