Doug Ford calls out municipalities as housing money goes unspent
Ontario is having trouble giving money away for housing, but challenging times are making it hard to get.
As Premier Doug Ford presented Toronto with a $67.2 million cheque to help build new homes amid a shortage that has pushed prices higher, his housing minister lamented more municipalities aren't meeting the housing targets entitling them to cash.
'We're going to hand out some nice 'building faster fund' cheques, not as many and for as much this year as we did last year,' Rob Flack said Friday at city hall with Mayor Olivia Chow.
Toronto broke ground on 21,000 new homes last year, 88 per cent of its target.
'That's why we have the big cheque,' said Chow, who noted 'building is slowing' because of high interest rates, and higher costs that mean 'builders just can't afford to build.'
The $1.2 billion housing fund was established in 2023 to provide financial incentives for municipalities over three years to build homes. It's intended to pay for infrastructure like water lines, sewers, roads and sidewalks. Money is paid as a reward to municipalities reaching 80 per cent of the target set out by the province.
Ford promised in 2022 to build
1.5 million new homes by 2031
but the province is at half the pace needed to reach that number in the wake of the COVID-19 pandemic and the challenging business conditions that followed.
While an average of 150,000 new homes a year is needed over the decade, the Progressive Conservative government's spring budget projected
housing starts will fall this year to 71,800 — down from 74,600 in 2024.
To spur construction, Ford's PCs passed Bill 17, the Protect Ontario By Building Faster and Smarter Act, which streamlines the approval process and fees for homebuilders, allows municipalities to reduce development charges on developers and delays payment until new homes are occupied instead of when a building permit is issued.
As well, the legislation given royal assent this week extends the power to grant
minister's zoning orders
that override municipal bylaws, raising concerns among critics about preferential treatment for some builders.
Ford repeated his calls for the Bank of Canada to lower interest rates and said economic uncertainty caused by U.S. President Donald Trump's tariffs isn't helping the housing business.
'People are nervous if they're going to have a job or not.'
Ford also pointed the finger at mayors of some municipalities he did not name, but who he said 'absolutely refuse to build.'
'We are going to work with the ones that want to build,' the premier added. 'They're going to get the money. The other ones aren't.'
The premier reiterated that he would like to axe the provincial portion of the 13 per cent HST on new homes and has asked Prime Minister Mark Carney to scrap the federal portion.
'We just have to get everyone on the same page,' Ford said.
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The biggest issue facing AGNC the past few years has been higher mortgage interest rates. There have been two main issues that have pushed up rates. One is that the Federal Reserve aggressively raised benchmark interest rates a couple of years ago to combat inflation. This resulted in mortgage rates also climbing. However, that was not the only reason mortgage rates shot up. Spreads between MBS yields and Treasury yields also began to significantly widen. During the COVID-19 pandemic, the Fed was a huge buyer of MBSs, driving down yields and narrowing the yield spread between MBS and Treasuries. However, after the pandemic, it stopped purchasing MBSs and began letting them roll off its balance sheet as they matured. About the same time, banks also began to back off buying MBS as bond prices fell, and the collapse of Silicon Valley Bank, which was heavily concentrated in long-duration MBSs, only pushed banks further away from the MBS market. During this period, the value of AGNC's MBS portfolio, as measured by its tangible book value (TBV), plunged. From the end of 2021 through the end of 2023, AGNC's tangible book dropped 45% from $15.75 to $8.70 per share. It has slipped a bit further since, and stood at $8.25 at the end of Q1 2025. Ultimately, where AGNC's TBV goes, its stock is sure to follow. Despite the rough stretch that AGNC has seen, the setup for the stock now looks a lot more favorable. Fed Chairman Jerome Powell has signaled that more rate cuts could be on the table, and the Fed's own projections point to lower rates in the years ahead. That should be a much better environment for AGNC. Fed rate cuts could benefit AGNC in two main ways. First, it would likely reduce its short-term funding costs; AGNC tries to borrow money to invest in MBSs with longer maturities and higher yields. Second, lower rates could help increase its TBV by boosting MBS valuations. The past few years, the Treasury yield curve was inverted, which means that shorter-term Treasuries, like the two-year, had a higher yield than long-term Treasuries, like the 10-year. Not surprisingly, this is not a good environment for a company that generates its income from the spread between short- and long-term rates. Now, AGNC actively hedges out its funding costs to better align them with the duration of its MBS assets. However, it's not able to fully offset the pressure from an inverted curve over an extended period of time. With the yield curve flipping from inverted to positive (long-term yields being higher than short-term yields) late last year, though, AGNC stands to benefit from wider spreads. AGNC's portfolio is also well-positioned if MBS yields begin to fall. More than 80% of its holdings carry coupons of 6% or lower, which helps limit prepayment risk. Prepayment risk is highest when homeowners begin to refinance into lower-rate mortgages, forcing mortgage REITs to reinvest in lower-yielding MBS. While high dividend yields are attractive, they can also be a warning sign. However, AGNC has maintained the payout through a very difficult environment, albeit sometimes at the expense of a lower tangible book value. It's not fair to say the dividend is completely safe, but if the yield curve continues to steepen, the dividend should become more sustainable. If MBS-to-Treasury yield spreads narrow from historically wide levels as banks or other institutions reenter the MBS market, AGNC could see a meaningful recovery in both its book value and share price. That's the best-case scenario. However, even if that doesn't play out, AGNC still has room to deliver solid total returns. The company pays a monthly dividend of $0.12 per share, which equates to a yield of about 16% based on recent prices for the stock. That dividend income alone puts it in a strong position to outperform in a market that seems to have stalled. With even a modest portfolio value recovery, AGNC could deliver annual 20% to 25% total returns during the next few years. Overall, I'd consider AGNC a high-risk, high-reward income play. However, the stock has already taken the brunt of the blow from higher interest rates and wide MBS-to-Treasury yield spreads, and the current environment may finally be turning in its favor. The wild card is whether historically wide MBS-to-Treasury spreads begin to narrow, because if they do, the upside could be significant. For investors who understand and are comfortable with the risks, AGNC offers a very high yield with strong potential upside. It's not a set-it-and-forget-it stock, but at current prices, it could be a smart investment for income-focused investors during the next few years. Before you buy stock in AGNC Investment Corp., consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and AGNC Investment Corp. wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. AGNC Investment: Its High Yield Looks Tempting -- Why the Stock May Be Ready to Rebound was originally published by The Motley Fool
