Logic suggests that if you don’t own a car, you probably have more money in your pocket to cover the cost of a mortgage. But in Canada, unlike in major U.S. cities, banks have not taken this into account when setting limits on how much first-time home-buyers can borrow in a preapproved mortgage.

Vancouver cycling and sustainable-transportation advocate Richard Campbell thinks this is ridiculous. In a phone interview, Campbell told the Georgia Straight there are far lower rates of car ownership in areas well served by transit, bike routes, and pedestrian walkways.

“Around the Joyce [SkyTrain] station, for each household, there is about one car,” Campbell said. “Once you get further out in the ’burbs—out in Coquitlam—it’s about 1.4 cars per household.”

The Canadian Automobile Association has calculated an annual cost of $9,030, or $24.74 per day, to own and operate a 2007 Dodge Caravan SE four-passenger van driven 18,000 kilometres per year. This is based on a 10-percent down payment, a four-year loan, and a 7.75 percent interest rate. Under identical circumstances, the annual cost falls to $7,080, or $19.40 per day, for a 2007 Chevrolet Cobalt LTZ.

Campbell pointed out that people living in urban areas spend approximately 10 percent of their incomes on transportation, compared with around 20 percent in more car-dependent areas. Therefore, Campbell said, it makes sense to let people who don’t own cars borrow more for a mortgage, all other things being equal, because they don’t have to fork over as much money to maintain a motor vehicle.

In the U.S., so-called “smart-commute mortgages” calculate transportation-cost savings, capping the amount at $200 per month for a single person, and $250 per month for a double-income household, according to a 2006 report by Vancouver firm McClanaghan & Associates. Last week, the Straight reported that Metro Vancouver (formerly known as the Greater Vancouver Regional District) did not mention smart-commute mortgages or so-called location-efficient mortgages in its 10-page Draft Regional Affordable Housing Strategy, which it is circulating in advance of a September 20 public meeting at the Hilton Metrotown hotel on affordable housing.

Mark Allison, a director of the nonprofit group Smart Growth BC, told the Straight in a phone interview that the public and private sectors could be doing a lot more to educate citizens about the impact of transportation costs on housing affordability. “I do think it’s important that more tools be made available to people so when they are choosing their location, they are more familiar with the tradeoffs involved,” Allison said. “They [buyers] are always told the heating costs and the strata fees. A lot of other important information—how far is it to walk to the nearest school? how walkable is it?—is stuff that’s not readily available.”

The McClanaghan & Associates report was prepared for Metro Vancouver, Coast Capital Savings, and the B.C. government. “Among Canadian lenders and mortgage brokers, there is the recognition that these transportation-linked mortgages are amongst some of the higher risk loans,” the report states. It adds that Canada Mortgage and Housing Corporation, a federal Crown agency, has a “general reluctance” to underwrite these mortgages.

Allison noted that the 64-page McClanaghan & Associates report focused almost entirely on whether the U.S. model of providing location-efficient mortgages could be adapted to Canada. Allison said he would have liked more attention to using “location efficiency” to assist people in this region make smarter housing choices.

“Most households in locations that aren’t ‘efficient’ have to have two cars,” he said. “I tell people that’s like having a perpetual $60,000 mortgage. It never goes away.”

Allison said this burden could be reduced if prospective home buyers could visit one site on the Internet and determine location efficiency. Such a site could highlight the level of transit use by area residents, whether the area is walkable, and whether there’s a high likelihood of having to own a second car. He added that it would be ideal if someone buying a home could punch in a postal code on the site for information.

“I think it’s a great partnership opportunity,” Allison said. “The real-estate industry definitely wants to promote the right location for their clients. The GVRD wants people to choose locations that are more transit-oriented.”