I'm going to go through some of the points Mr. Sorbara made. First of all, on the previous study, you mentioned you had heard from the Canadian Mortgage Brokers Association that the stress test should apply to both low- and high-ratio mortgages—I'm calling them that, even though those are not the right terms—but I don't believe they said to apply a 200 basis point stress test. That's where a lot of the concern is. There are other changes that come with these B-20 regulations, but it is specifically the stress test that is causing 95% of the concern I hear from my constituents.
As I said, I'm not opposed to a stress test, just like the mortgage brokers weren't, but I think it's a question of how much and whether you apply it to everybody across the board, whether you're in a variable, a fixed, a two-year, a five-year, or a seven-year mortgage. There should be some flexibility there, but I don't know where the right point is. That's where the evidence has to come in.
As you said, a person who stays with their lender is not affected by the stress test, but then that prevents them from being able to go out and shop around for the best rate they can possibly get. That's where a lot of angst is coming through, because on renewal—and I'm probably not using the right technical term there—that's where a lot of people are getting pinched. That's what concerns people. I've had a few people tell me their rates went up because they weren't able to go and shop around to get the best one.
As far as the argument goes that not enough time has passed to collect enough evidence or data, obviously, starting the study now in June, this would take it into the fall. I'm more than happy to amend the motion in some reasonable way so that this could start, say, November 1, and then we could use some time in November to do the study, so that it doesn't conflict with other work that's being done. Because this is a subcommittee that would be created, there's no guarantee that all of us here would be doubling up on both. There are other members of the House of Commons who specialize in this area because they were either mortgage brokers or real estate agents in their previous life, so we don't have to double up on the committee.
If there's another way we can find a way to do a mortgage study at the main committee, I'd be more than happy to entertain such a motion. If you remember, I moved a motion a few weeks ago that you voted down. This is why I'm bringing this back and proposing this other elegant way of finding a solution.
Mr. Fergus, you said there could be a lot of work on the two other matters. I agree with you. There are roundtables and the pre-budget meetings of this committee. There is also the study we have begun and nearly finished. That is another important file we will have to finish. That is why I am suggesting that a subcommittee of the Standing Committee on Finance be created to enable us, the current members of this committee, to focus on the two other matters. A subcommittee would look at mortgages and the stress test.
The study is very important as regards guideline B-20 and I think a detailed study is in order. We could have two to four meetings; that is negotiable. We would have to give the various associations and people who work in the sector enough time to prepare. The study could begin in November. I say November, but that is just one possibility. I think that would give people in the construction sector the time to start collecting the data to present to the committee. We will have to determine whether guideline B-20, the residential mortgage underwriting practices and procedures, have achieved the stated objectives or whether they have hurt certain parts of the market, especially the residential market.
I'll go back to one other thing Mr. Sorbara said, and I'll stop there. It's on housing starts. He mentioned a supply problem. I agree and that's something I've heard consistently from real estate agents and from brokers.
There is a study showing that the Canadian housing starts trend declined in May. It's in the June 8, 2018 “Housing Observer”, produced by CMHC, which notes that “the national trend in housing starts declined following several months of stability”. It's going down.
The study report goes on to say that this “reflects a decline in multi-unit urban starts in May that leaves them close to their 10-year average following several months of historically elevated levels”, so they're going down too. The supply side has even been affected, in that builders are not deciding to start building now so they can have it on to the market probably almost a year down the line. Even they are adjusting.
It goes into monthly highlights for the different markets out there. It has Vancouver, Victoria, Saskatoon, Toronto, Brantford, Kingston, Sherbrooke, and New Brunswick. It mentions that housing starts in New Brunswick dropped 10% in May 2018 compared to the same month last year, continuing a trend of lower housing starts so far in 2018. That's something that repeats itself.
There's a supply side problem, I don't deny it at all, but that could also be considered as part of a study of these B-20 guidelines and their impact on the market. Prices are down, and volumes are down, but not equally across all markets.
I would say that the market I'm in and the people whom I represent in my riding are much more heavily impacted compared to their previous situation, when there really wasn't a serious issue, I think, with prudential lending. In fact, people are getting into shorter term mortgages now, which I think creates more risk, not less risk, for the banks, and people are taking on higher rates at times, not very many of them, but some. They're paying more at the end of the month than they were before. I think that's a serious problem, too.
Like I said, I'm willing to consider some type of amicable solution to having a motion approved before the spring session ends for a mortgage study that would begin later in the fall session. The committee has the power to defer a mortgage study to begin at some future point. If I can amend my motion or propose a new motion that would kick off a mortgage study, I'm more than happy to entertain that.