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BMO unlocks $12 billion for “affordable” home building

August 13, 2021



BMO announced August 5, 2021 that it will commit $12 billion to finance “affordable housing” over the next ten years, in support of Canada Mortgage and Housing Corp. (CMHC),  but released few specific details.
BMO said financing will help enable clients to “purchase, develop, renovate and maintain affordable housing, social housing, community housing, shelters and housing for vulnerable populations.”
The bank’s commitment will be managed by its Sustainable Finance Group. According to a BMO statement, eligible projects include lending, investing and underwriting solutions for retail, commercial and corporate clients involved in originating and funding affordable multi-family mortgages, as well as financing provided to affordable developments through BMO's partnership with Options for Homes and other programs.
But it is unsure how the financing will play out on the ground.
Affordability isn’t defined in the bank’s statement and the bulk of social housing for vulnerable populations is now paid for by various levels of government. It is also unclear if BMO financing will come with lower lending rates or other perks to encourage market builders and multi-family developers to deliver lower-cost homes.
According to CMHC, housing is considered to be affordable when a household spends less than 30 per cent of its pre-tax income on adequate shelter. Households that spend more than 30 per cent of their income on shelter are deemed to be in core housing need.



 


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