Finance Committee on May 6th, 2019

[Pierre Poilievre, Conservative, Carleton, ON]

How much has that increased in the last five years?

[David LeDrew]

For the last five years, I don't have that number. In the last year, it looks like it has increased by about $16 billion.

[Pierre Poilievre, Conservative, Carleton, ON]

Sixteen billion. Would you be able to share that information with the yearly book of CMHC's securitization program and its size with the committee?

[David LeDrew]

Yes, I can.

[Pierre Poilievre, Conservative, Carleton, ON]

I suspect you can pull it out of the annual reports.

[The Chair, Liberal, Wayne Easter]

Just send it to the clerk as quickly as you can. He'll distribute it to the committee.

Mr. Richards is on deck now.

[Blake Richards, Conservative, Banff—Airdrie, AB]

It came back to my mind. The one question that I had remaining was about the effects on pricing. I'm wondering if any analysis has been done, both in looking at other government programs in other jurisdictions and also just in modelling on this, on the effects that might be expected on pricing.

Particularly when we're talking about new home sales and where we're talking about 10% being provided here, is there any expectation, based on that analysis, of pricing being inflated as a result of the fact that buyers now see that they'll be getting 10%? Of course, builders—

[Michel Tremblay]

I apologize. I don't have the breakdown between new and resale, but our overall analyses show that the incentive, based on the parameters we know at this time, would cause an increase of about 0.2% to 0.4% on house prices.

[Blake Richards, Conservative, Banff—Airdrie, AB]

There is an expectation of some upward pressure on the prices, then, and I think that's all the more reason why the details of this are so important. At the end of the day, I think the challenge that a lot of first-time buyers face is having to save for that down payment, rather than the size of the mortgage. Certainly, that was my experience, having worked in the industry.

If we're talking about any amount of upward pressure on those prices, that just makes the problem worse. The bigger problem that first-time buyers face is actually going to be negatively impacted by this policy. I think those details are all the more important, and we don't seem to have any of them.

Anyway, thank you. I appreciate it. I know it doesn't rest at your feet that we don't have those details. It obviously rests at the Trudeau government's feet, so no criticism to you, but it is unfortunate that we can't get those details.

[The Chair, Liberal, Wayne Easter]

Yes. That's not the officials' responsibility.

Mr. Poilievre.

[Pierre Poilievre, Conservative, Carleton, ON]

Yes, and I hope the officials don't interpret our criticism as being directed at them. They clearly know their files very well, but they can only work with what they're given, which unfortunately isn't very much.

Mr. Tremblay has said that this program could lead to a 2% to 4% increase in prices.

[Michel Tremblay]

I'm sorry. That's 0.2% to 0.4%.

[Pierre Poilievre, Conservative, Carleton, ON]

Okay. It's 0.2% to 0.4%.

On the issue of appreciation, have you done any analysis on the amount of appreciation this program caused where it's been tried on a large scale before?

[Michel Tremblay]

Do I understand your question correctly? Have we done analysis as to the impact on pricing in other jurisdictions where it's been tried before?

[Pierre Poilievre, Conservative, Carleton, ON]

Yes.

[Michel Tremblay]

We have not tried to do that, primarily because housing markets, even within Canada, are very distinct as to how they'd react. Some of the larger programs we've mentioned, such as the U.K. program, had much fewer limits.

One of the things we're trying to do to contain, actually, the rise in housing prices is to have this targeted. That's why it's first-time homebuyers. That's why it's people who already qualified for insured mortgages, whereas in the U.K. the program was much less restrictive. It wouldn't have been a comparative in terms of the impact on prices.

[Pierre Poilievre, Conservative, Carleton, ON]

You threw in an adverb there that has confused me.

I understood that people were going to be able to use the homebuyers incentive to help them qualify. You said that this will be available to people who have already qualified. Which is it?

[Michel Tremblay]

I meant the people who qualify for mortgage loan insurance.

[Pierre Poilievre, Conservative, Carleton, ON]

Yes, I know that, but is it qualify without having received the incentive or qualify because they have received the incentive?

[Michel Tremblay]

That will depend on the final terms and conditions.

[Pierre Poilievre, Conservative, Carleton, ON]

Presumably if someone is helping to make a down payment for you, it helps you qualify, but you said this is going to be available to people who have already qualified. There is a big distinction.

There's a young person out there who doesn't currently qualify for mortgage insurance because he can't muster the down payment or his income isn't high enough, but what if someone came along and said, “Well, what if I helped you out and gave you $20,000 assistance with your down payment? You can give it back to me when you sell the house.” Then he might qualify.

I guess my question is, are people able to use this in order to qualify, or must they have already qualified in order to use it—chicken or egg?

[Michel Tremblay]

Sorry, they have to have qualified.

[Pierre Poilievre, Conservative, Carleton, ON]

They have to have qualified without the incentive.

[Michel Tremblay]

This was not envisioned to be a down payment assistance program.

[Pierre Poilievre, Conservative, Carleton, ON]

People who can't qualify right now will not be able to use this in order to qualify.