Finance Committee on Jan. 30th, 2017

[Stuart Levings]

We're not a lender obviously; we're the mortgage insurer. Our premiums are driven by the losses we would expect and the capital we have to hold. From my perspective, I would say that we have observed pricing changes in the industry related specifically to some of the changes, in particular, on the refinance side. Rates have gone up because funding is now harder to get and, therefore, there is a higher cost, and that is being passed on to the consumer. That's an observation.

[Robert Martin]

Yes, and that's precisely our experience. That's what we're seeing in the market.

[Alex Ciappara]

Similarly, we've seen some lenders increase rates for a particular set of mortgages, say, mortgages with longer than 25-year amortizations. We have seen some lenders do that as well.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Okay, I think we all would agree government should create a market that private enterprise can then work within. But in this case, by changing the rules of the game, so to speak, that does change behaviours, including costs that ultimately are borne by the consumers or through competition, as we were saying earlier, or consolidation by certain parts of the lending industry or through credit unions.

The other brief question I was going to ask, Mr. Chair—

[The Chair, Liberal, Wayne Easter]

We'll just let Mr. Whalen in and come back to you.

Mr. Whalen.

[Nick Whalen, Liberal, St. John's East, NL]

Thanks, Mr. Chair.

We've talked a lot about demand-side regulation and demand-side forcing in the market in order to reduce risk. What about supply side? Are there things that the federal government can consider on the supply side to increase supply to help bring down prices? Are there things that the federal government used to do, or could be doing now to allow the supply in the market to grow to help depress prices, or is that a zero sum game?

[Stuart Levings]

I would say that is an absolute driver of the problem and it's a very complicated one because supply is often caught up in local government or local municipal issues and availability of land, availability of developers. It's a very complicated issue but one that should not be ignored. That goes back to one of our recommendations, which is to collaborate with local governments and municipalities to study all these areas, because there are potentially ideas that could come there that would help supply.

[Alex Ciappara]

I would also add that I think there's an acknowledgement by the federal government with respect to the fact that they don't have all the levers when it comes to addressing the supply side. With regard to supply-side issues, back in June 2016, there was a federal-provincial-municipal working group on housing that acknowledged the fact that housing prices are driven by a variety of factors, both on the supply and demand side, and that the federal government has just a certain amount of levers and there needs to be increased coordination amongst the three levels of government.

[The Chair, Liberal, Wayne Easter]

Mr. Morrison.

[Jeff Morrison]

Just very quickly, in our world, supply is the key priority, and a number of the recommendations that we've submitted regarding the national housing strategy including the notion of the creation of a dedicated housing financing authority are meant to address exactly that.

[The Chair, Liberal, Wayne Easter]

Mr. Albas, you have the last question.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

I do appreciate that because I want to touch on the social housing side.

I'll give you a good example. On Vancouver Island, the health authority contracted with a private contractor who ended up building to spec at a very good rate an apartment building specifically for people with disabilities. The challenge was, when this gentleman went to Canadian Mortgage and Housing Corporation, he was told that he would not receive the same lowered insurance rate for the mortgage that, if the health authority had constructed the apartment block, they would have received. When asked about the policy, basically there is no law that says they can't.

As my colleague here, Phil McColeman, said earlier about the savings that could be used if you leveraged the private sector's expertise and efficiency in such a way that the public sphere could help the people who need it the most, we could build more housing and we would have less risk overall. I really would hope that, when you're talking to the minister, or if any of the minister's staff is listening, that you would take that kind of feedback into consideration.

[The Chair, Liberal, Wayne Easter]

Mr. Morrison, we'll have a quick answer.

[Jeff Morrison]

Very quickly, to be clear, we are not discounting the private sector. There are some really innovative PPPs happening.

We spent the day with the head of the Edmonton housing authority the other day, where private sector partners are lining up around the corner wanting to partner with that housing authority. It's not off the table, but certainly the provision of housing from a public standpoint needs to ensure that rents are maintained at that subsidized level.

[The Chair, Liberal, Wayne Easter]

Okay, we are at the adjournment hour.

Mr. Macdonell, I don't think you had the chance to say anything. Do you want to say anything to wrap up so you will be on the record?

[Winsor Macdonell, Second Vice-President and General Counsel, Genworth Canada]

No, thank you very much. My colleague Stuart Levings has said enough.

[The Chair, Liberal, Wayne Easter]

I don't know if that's good, Stuart.

Anyway, I thank all the witnesses for coming.

This meeting is adjourned.