Every Canadian paid $10 last night for an election where very little changed and voter participation was the lowest ever recorded since Confederation. We still have a Conservative Prime Minister and a Liberal Opposition. The NDP made modest gains in places like St. Thomas, where manufacturing jobs are threatened. The Green Party is erased from the House of Commons.
The $350 million, 37-day election campaign was a high-priced distraction during a time of major world economic woes sparked by the American mortgage meltdown. The fact that the Toronto Stock Exchange rose yesterday based on how world governments shored up their banks to protect them from the mortgage meltdown, untempered by the results at the polls, underscores how important the world economy has become to Canadians. (Three quarters of every loonie earned in Canada returns to the U.S. market in some form.)
Yesterday, the average closed, 5-year Canadian mortgage had an interest rate of 6.47%. Comtech Credit Union was still offering a reasonable 5.25%, but The Big 5 banks (Scotiabank, Bank of Montreal, Canadian Imperial Bank of Commerce, TD Canada Trust, and Royal Bank) were gouging at 7.20%. High mortgage interest rates pose a major hurdle for Canadians seeking to buy a home, vacation property, or business premises.
Let’s remember that federal help to the banks is not the only solution to high mortgage interest rates. All levels of government can help buyers through the Canada-Ontario Affordable Housing Program. Local governments can use the program to help buyers by deferring development charges on new homes.
The City of Toronto did this for the Sisters of St. Joseph’s 60 units on Manse Road in Scarborough, and 150 affordable homes at 403 Keele Street, in 2007. In the first case, the Sisters of St. Joseph will have their no-pay second mortgage to the City – comprised of deferred development, land and planning charges — forgiven in 25 years. In the second case, the deferred payment is a repayable 10-year second mortgage held by the City.
In both cases, the City of Toronto’s second mortgage reduces the size of the bank (first) mortgage and the buyers’ carrying costs. However, if the buyer sells the home, the second mortgage must be repaid; it is not portable. This deferral program frees up resale housing stock for more affluent buyers. Beefing up the Canada-Ontario Affordable Housing Program is a viable first step for helping all Torontonians, regardless of income, afford a home.
