Canadian banks need to take steps to assist mortgage holders who are struggling to stay above water after a rapid spike in interest rates, according to new guidelines issued Wednesday.
I still think the easiest way to solve the lack of housing issues would be to charge an override premium interest level for second homes and investment homes.
Make it unprofitable for landlords to carry the costs, and voila, more homes on the market.
That, or reverse the taxability of interest on homes. Primary residence? Interest is deductible against earned income. Investment property? No tax breaks on interest paid, only capital improvements. This would also be a huge cost-of-living improvement for lower and middle classes.
Would make for a lot of unhappy boomers with multiple rental properties, but honestly fuck em, they’ve had a good enough ride already.
You can’t solve a shortage of houses by discouraging people from building them. Canada is simply not building enough housing and has not been doing so for a long time. Your proposal would have a marginal effect at best and would in any case be only a temporary solution. People who buy second homes do so in places where there are generally few jobs. And people who buy houses as an investment need to rent them … which is not necessarily a bad thing. The problem we have is that home prices have risen to such stratospheric heights primarily because of policies that discourage new development. The only way to fix that is to promote legislation that penalizes NIMBYism and encourages building in urban areas.
According to CMHC, housing starts have been relatively flat since the 70s. The population has not been.
Just keep kicking the can down the road until there’s literally no other option…
Or, hear me out, bail out principle residences and allow the banks/investors to eat there losses as is predicated in a free market capitalism system. They literally asked for it…
Canadian banks have been seeing a rise in such negatively amortizing mortgages, with the expected time for a borrower to pay back the loan sometimes stretching past 30 years. At least one quarter of the Canadian mortgage portfolio at Toronto-Dominion Bank, Bank of Montreal and Canadian Imperial Bank of Commerce are now in that category. And nearly a third of Royal Bank of Canada’s domestic borrowers are are covering their interest only, so their amortizations are extending too.
Oh boy… 😬 At these proportions, the banks don’t have a choice but to stretch the amortizations.
I’m sure the economy will turn around once WW3 starts, wars always fix economic problems!
I wish I was joking.
First we have to go through one or two countries going through hypermilitarization and growing their armaments and stockpiling weapons … I know we have one country that is there now but we need it to do lots, lots more. Then we can start invasions and some totalitarianism, global crisis and many a genocide or two … then we can get into the meat of WW3
We need to treat primary residence mortgages like taxes. I get the increase in borrowing rates to prevent people from buying things to combat inflation, but it really doesn’t help the cost of living crisis when you price having a place to live out of many Canadians’ budgets.
That’s what I don’t get. Can’t they subsidize lower rates for mortgages on primary residences?
