Ontario Housing Minister Paul Calandra expressed confidence that the Bank of Canada's interest rate cut on Wednesday will help stimulate housing development as the province works toward its goal of building 1.5 million homes by 2031.
Calandra told reporters he was “very relieved” interest rate That number was eventually revised down after the country's central bank cut interest rates by 0.25%.
Many in the construction and development industry cite high interest rates as a problem holding back new home construction in Ontario. Developers have a hard time getting high-value loans to build homes, while potential buyers are put off by mortgage rates.
Mr Calandra said he believed lower interest rates would “definitely bring back some investors who had paused construction when interest rates were in the high 5 per cent range”.
“When interest rates stopped climbing, there was some optimism,” he said.
Ontario Premier Doug Ford, who has expressed dissatisfaction with high interest rates, said he believes a small rate cut will spur housing construction across the province.
“I believe that when you lower interest rates, housing will mushroom everywhere,” he told reporters.
Calandra said while he doesn’t want to “overstate” the impact of the relatively small drop in interest rates, it’s an important moment for homebuyers and construction in Ontario.
Emails needed on the day
Top news from Canada and around the world.
“It’s a relief for a lot of people and it helps get more people moving and helps people get into the market,” he said. “I think you’ll see people stepping forward almost immediately.”
The province is striving to build 1.5 million new homes by 2031, a goal that would require an average of 150,000 new homes per year for 10 years. In 2023, only 109,000 new homes were put into service in Ontario.
To reach that goal, the province has begun counting basement units, garden suites and long-term care beds in its count of new homes. It also plans to include student housing and retirement homes.
Former housing minister Steve Clark previously said the 1.5 million homes target was somewhat “outside of my control” because of interest rates and other market conditions.
“We’ve gotten to the point in inflation in our country where I can only control the things that are within my purview,” Clark said in April 2023. “I want to make sure everything I can do with my provincial and municipal partners is in place so that when the economy improves, we can hit the ground running.”
On Wednesday, the Bank of Canada cut its benchmark interest rate to 4.75%.
Bank of Canada Governor Tiff Macklem said in prepared remarks Wednesday that the “significant progress” in taming inflation should be “good news” for Canadians.
“We have made great progress in fighting inflation,” he said.
Macklem said if inflation continued to ease, “it would be reasonable to expect further cuts in the policy rate.” But he added that the central bank would make decisions “on a meeting by meeting basis.”
Calandra welcomed suggestions that interest rates would continue to fall and said it could be a key catalyst.
“It looks like the trend is toward lower interest rates,” he said. “I think that will help unleash a lot of wait-and-see action.”
— Attached is Craig Lord of Global News
© 2024 Global News, a division of Corus Entertainment Inc.
