Finance Committee on Jan. 30th, 2017

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

I'm just going back to our original discussion about people who own property of over $1 million or who are doing refinancing that wouldn't qualify under the new rules who will, because of the increased costs, have to go to a traditional lender.

I ended up going off topic.

[The Chair, Liberal, Wayne Easter]

I know. Thank you.

Do any of the other witnesses want to add anything?

All right. With that, we'll thank the representatives from the Bank of Canada, Canada Mortgage and Housing Corporation, and OSFI. Thank you for your testimony and your answering of questions before the committee.

Before we suspend for the next four witnesses to come up, I wonder, since there's been some off-the-side discussions here, if this will fit with people's approval. There is a citizen initiative for a vigil on Parliament Hill in solidarity with the Muslim communities of Quebec and Canada for the people who were killed at the mosque in Quebec. It is a two-hour vigil. I know there are some members who would like to attend.

I have a suggestion. We have a number of witnesses who are supposed to meet until 7:30. Would it be acceptable that once we hear the testimony of the witnesses, we have a moment of silence in solidarity with those who are on Parliament Hill, rather than disrupting the witnesses and closing the committee down? It is a two-hour vigil.

Would that be acceptable?

[Ron Liepert, Conservative, Calgary Signal Hill, AB]

We would support that, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Is everyone okay with that?

That's what we'll do. Following the presentation of the witnesses in the next round, we'll have a moment of silence in solidarity with the vigil that's on Parliament Hill.

We'll suspend now.

[The Chair, Liberal, Wayne Easter]

We'll reconvene for the second session of the study on the Canadian real estate market and home ownership.

We'll start with the witnesses from the Canadian Bankers Association. Mr. Ciappara is with the CBA and Mr. Hogue is with the Royal Bank of Canada. Mr. Ciappara will be going first.

[Alex Ciappara, Director, Credit Market and Economic Policy, Canadian Bankers Association]

Thank you very much, Mr. Easter.

Good evening, everyone. We would like to thank the committee for the opportunity to contribute to its study on the Canadian real estate market and home ownership. The Canadian Bankers Association works on behalf of 59 domestic banks, foreign bank subsidiaries, and foreign bank branches operating in Canada and their 280,000 employees.

Accompanying me today is Robert Hogue, a senior economist at the Royal Bank of Canada. As you may know, Robert is one of the leading experts on the Canadian housing market.

At the outset I should note that, as has been widely discussed even today, there is not one single housing market in this country but rather several different markets across the country impacted by a range of supply and demand factors that affect housing prices. One factor common to all these markets is the historically low interests rates. Of course there are other more local factors, such as the city or region's attractiveness as a place to live and work, land use and zoning restrictions, the relative availability of certain housing types, and population and job growth.

For instance, Vancouver and Toronto have seen growing housing prices over the past few years. Meanwhile, oil-producing regions have seen either declining or negligible housing price growth. In the rest of the country, we have seen housing prices grow more moderately. Accordingly, when developing housing policies and regulations, it's important to account for the variability that characterizes these housing markets.

As the committee is well aware, the federal government has introduced a number of changes to Canada's mortgage and housing markets over the last several years. For example, on insured mortgages, the government has reduced the maximum amortization period, increased minimum down payments, and implemented more rigorous stress testing.

We understand and support the federal government's objective of maintaining stability in the Canadian real estate market in all parts of the country. Given that the impact of some of these changes has yet to fully materialize, we believe it would be prudent to wait and assess the impact of recent changes before contemplating any additional new measures. Canadian banks have a strong track record of careful, prudent mortgage lending. Moreover, the vast majority of Canadians are responsible borrowers who use credit wisely. This is evidenced by the performance of banks' mortgage portfolios before, during, and after the global financial crisis.

The CBA closely monitors mortgages-in-arrears statistics. A mortgage is classified as being in arrears when the borrower is 90 days behind on their payments. Currently the Canadian mortgages-in-arrears rate sits at 0.28%, which is close to the low rate prior to the global financial crisis. The rate in Canada during the global financial crisis peaked at 0.45%. By way of comparison, the arrears rate in the United States during the crisis peaked at above 5%, more than eleven times the Canadian rate.

Since the 1990s the rate in Canada has never climbed greater than 0.65%. That's over two decades of stability, in times of both high and low unemployment, fluctuating interests rates, and a fluctuating Canadian dollar. Canadian banks have a solid mortgage lending record, rooted in high underwriting standards that have only strengthened since the financial crisis. Whether a mortgage is insured or uninsured, banks apply the same prudent application and underwriting processes.

Banks are rigorous in the origination of new mortgages, including the verification of a borrower's identity, employment status, income, and credit history. Furthermore, in making a decision to extend the mortgage, banks take as paramount a borrower's demonstrated willingness and capacity to make debt payments on a timely basis.

Canada's banks also undertake rigorous stress testing to ensure that Canadians can pay off their mortgages during changing economic conditions. This includes requiring potential borrowers to qualify at higher interest rates to ensure that they are able to make future payments under higher interest rate conditions. It is also important to note that the Office of the Superintendent of Financial Institutions plays an important supervisory function over bank underwriting practices.

In closing, banks take seriously the role they play along with governments, regulators, and Canadian borrowers in ensuring that the Canadian mortgage and housing market remains stable and sound.

I would like to thank the committee again for this opportunity to provide the banking industry's perspective on Canada's real estate markets. We would be happy to answer your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Ciappara.

Turning to the Canadian Housing and Renewal Association, we have Mr. Morrison, the executive director.

Welcome, Jeff.

[Jeff Morrison, Executive Director, Canadian Housing and Renewal Association]

Thank you, Mr. Chair, for the opportunity to speak to the committee today to discuss home ownership in Canada.

As many of you may know, the Canadian Housing and Renewal Association represents the interests of the social, affordable, and non-profit housing sector in Canada.

When most of us think of home affordability and ownership we of course tend to think of the private market. Many of us have followed this traditional path towards home ownership, which includes entry into the rental market, saving for that first down payment, taking on a mortgage, refinancing, and, for the lucky of us, maybe paying off the mortgage. Although this path has been made more difficult with housing prices that have generally exceeded inflation over the past few years, we know that based on CMHC's fourth quarter 2016 report that MLS sales in 2016 will exceed 2015, demonstrating that this traditional path to home ownership remains viable.

However, I would ask the committee to consider the path to home ownership from different and non-traditional perspectives, where the social and non-profit housing sector and social enterprise would play a leading role.

As we all know, the traditional route to property is simply not a possible scenario for many Canadians. Even saving the down payment is out of reach for many low-income Canadians.

Within the social and non-profit housing sector there are models that seek to encourage and lead to home ownership. The Habitat for Humanity model is one example where sweat equity acts as a form of down payment. There are also innovative social housing models where the housing organization or provider provides financial literacy programs as well as matching incentives for families who save and build their assets in escrow. This pool of capital can then be used by households for such investments as a down payment.

There are also models such as the Attainable Homes Calgary Corp., which is a city-owned corporation that enables first-time buyers to buy with a down payment of as little as $2,000. This corporation works with builders, developers, lenders, and others, in order to bring down the upfront costs of ownership to deliver entry-level homes. As another example, there's the Trillium Housing social enterprise model, or the Options for Homes model, both in Toronto, which are non-profit housing organizations that employ a “pay it forward” model, where the non-profit provider co-invests with the homeowner by taking out a second mortgage on a property. Costs are kept down by partnerships with local suppliers, no payments on the second mortgage are required until the unit is sold or rented out, and the price appreciation covers the difference. In Toronto, the Options for Homes model has helped about 3,500 households enter the home ownership market when they otherwise wouldn't have been able to.

So what can the federal government do to encourage and promote some of these non-traditional routes or models of home ownership, and reduce inequity?

In general, we are saying that in the forthcoming national housing strategy, the federal government needs to focus on the needs of Canada's most vulnerable populations to better address gaps in terms of fairness. In our brief on the national housing strategy, we made 24 recommendations on how the federal government could do that. I would be happy to share a copy of that brief. However, for the purposes of the committee's mandate, as specific policy measures to strengthen the capacity of the social housing sector to encourage home ownership, we suggest the following three.

Very quickly, first, follow through on Prime Minister Trudeau's mandate letter directive to make surplus federal lands available for social and non-profit housing purposes. Enactment of such a policy would cover a significant capital expenditure for social housing providers. CHRA has recommended vastly expanding the already existing surplus federal real property for homelessness initiative to enact this policy.

Second, introduce a social housing sector transformation initiative that would provide social housing providers with relatively small amounts of capital to introduce innovative programs such as the Trillium Housing or Attainable Homes Calgary model. This is especially important in light of the end of operating agreements that thousands of social housing providers are already facing.

Lastly, in fact we saw this in your first round of questions, there is a need for better research and collection of domestic and international best practices on the interconnections within the housing spectrum. By researching and disseminating information on housing policies and models that work, we can facilitate the move to ownership. In our submission to the national housing strategy, CHRA has recommended the creation of what we call a housing research hub similar to the Canadian Institutes of Health Research, that would, among other things, conduct and disseminate world-class research on housing policies.

The road to home ownership is traversed in a lot of different ways. If we want housing policy that meets the needs of all Canadians, not just those with the greatest incomes, we need to think holistically and creatively to ensure that ownership is a dream that all Canadians can access. The social and non-profit housing sector is here to help make that happen.

Thank you.

Thank you, Mr. Chair.

[The Chair, Liberal, Wayne Easter]

Thank you, Jeff.

From the Canadian Credit Union Association, we have Mr. Martin and Mr. White.

[Christopher White, Vice-President, Government Relations, Canadian Credit Union Association]

Good afternoon.

The Canadian Credit Union Association welcomes the opportunity to brief you in relation to the Canadian housing market. Our comments focus on recent regulatory developments and the government's proposed mortgage insurance risk-sharing framework. Our message to this committee is two-fold.

Credit unions believe, much like the CBA, that it is time for a pause and review. The myriad regulatory measures that have targeted the housing finance market and mortgage insurance over these last number of years have created a situation where consumers and associations such as ours need to take a step back to really understand the objectives of the government, and particularly what the impact of these measures on first-time homebuyers and those in rural and remote regions really looks like. It's not clear to us that the government has allowed itself that opportunity.

CCUA does not support the government's proposal to introduce a mortgage insurance risk-sharing framework for lenders. In our view, there is no strong empirical justification for introducing the framework, and the models will likely exacerbate mortgage price and availability issues for first-time homebuyers and for Canadians living in rural and remote regions.

Since the financial crisis, the federal government has announced at least 15 housing finance-related measures aimed at addressing household debt vulnerabilities, housing price pressures, and managing government exposure. These cascading measures have produced a secular decline in the rate of mortgage origination in Canada since 2008, with the rate falling from a peak of around 13% to its current value of around 6%.

The recent changes to high-ratio and low-ratio insured mortgage underwriting requirements are still working their way through the market. Observers, including ourselves, expect them to exert a significant downward impact on market activity.

A CCUA survey of credit unions indicates that, if the rules announced in late 2016 had been in place on January 1, 2016, high-ratio mortgage volumes, on average, could have been down by nearly 37% last year.

The largest impacts are in B.C.'s Lower Mainland, with potential denials of high-ratio mortgage applications ranging from 35% to 69.5%, depending on the credit union. The second-largest projected impact would be in the GTA with potential denials of high-ratio mortgage applications ranging from 22% to 50.7%. In Alberta we saw ranges from 13% to 46.4%.

Based on 2016 approvals, our survey suggested that first-time homebuyer approvals could be down nearly 20%.

We also expect significant declines in rural and remote Canada. Tougher qualifying requirements for low-ratio transactional mortgage insurance would have made the product unavailable to nearly 50% of qualified borrowers based on our 2016 data. Low-ratio transactional insurance is often used by credit unions in rural and remote areas to give the lender greater protection in the event the home cannot be easily sold in a liquid market. It appears that mortgage credit in these areas will be less available or come at a higher cost.

We stress that these are estimated impacts based on credit union 2016 approvals. Of course, people may choose to delay buying or buy smaller homes, and the bank of mom and dad may contribute further to a down payment. That said, we believe that when the spring buying season commences, these measures will have a significant impact on the market, whether it be urban or rural, with high or low growth.

Tightening mortgage insurance eligibility requirements also impacts the competitive balance in the financial sector. New eligibility requirements have reduced the pool of mortgages eligible for insurance. This hits the mortgage funding side because these insured mortgages can be securitized. This is a concern for credit unions that have been involved in securitizing mortgages to help fund growth across the country.

This funding channel has now been significantly curtailed and this forces credit unions to fall back on deposits and retain earnings to fund growth. Meanwhile, large banks are able to attract funding through other channels not available to co-operatively-owned credit unions. Inadvertently, these new rules have tilted the competitive balance towards the already dominant banks.

In our ongoing policy dialogue with the Department of Finance—and congratulations on your appointment as the new parliamentary secretary—we have recommended that it is time for the federal government to pause and review the impact previous measures are having on the market. We reiterate that recommendation today. Officials must consider whether, from a policy perspective, the impacts on first-time homebuyers, rural and remote regions, and the competitive balance in the financial sector are necessary, desirable, and well calibrated.

CCUA would welcome such an ongoing dialogue.

In late October 2016, the Department of Finance announced it would be consulting Canadians and stakeholders in relation to implementing a risk-sharing mortgage insurance framework. The proposals envision a significant departure from Canada's current practices.

Currently, many regulated lenders are required to transfer mortgage risk to mortgage insurers and indirectly to the federal government's guarantee of mortgage insurer obligations. Borrowers pay premiums to obtain this blanket coverage, and lenders can also choose to transfer risks on other mortgages that they elect to insure. Lenders pay premiums on those mortgages. It should also be noted that these lenders can see insurance claims denied if they do not meet underwriting standards set by mortgage insurers and the government.

The risk-sharing proposals would see lenders accept more losses associated with defaulting mortgages and make more of their capital available to cover these losses. Lenders would be exposed to loan losses in both a normal loss situation as well as in extreme loss events. Policy-makers expect that this prospect of losses will further discipline lender risk management practices and result in a tightening of lending criteria.

CCUA acknowledges the federal government's theoretical rationale behind their risk-sharing proposals; however, we don't believe that a strong empirical argument has been made to date for these proposals. To elaborate, the logic underlying the government's proposals suggests that incentives exist that promote risky lending because lenders can use mortgage insurance to off-load the risk associated with mortgage lending.

However, we have not been presented with evidence that illustrates this happening. In fact, CMHC numbers suggest that arrears on insured mortgages are incredibly low. Between 2010 and 2015, the 90-day arrears rate on insured mortgages averaged 0.36%. As of September 30, 2016, arrears on mortgages in the CMHC's National Housing Act mortgage-backed securities program sat at 0.2% for federally regulated institutions and 0.13% for provincial institutions, including credit unions. These numbers hardly suggest lax insured mortgage underwriting practices in Canada. While this lack of supporting data should give the federal government pause before implementing their risk-sharing proposals, there are other issues that should also be considered.

These remarks that I have just given have noted concerns about mortgage credit for first-time homebuyers and those living in rural and remote regions. In our view, the introduction of risk sharing will exacerbate the challenges already faced by those consumers. Lenders will respond by increased capital provisioning to offset anticipated losses, reduce lending as a result, and increase the cost of credit to demographics and regions perceived to be higher risk yet also very much in need of mortgage credit. It is also possible that insurers will increasingly calibrate premiums to assessment of local markets and the concentration risk of the lender that the insurer now has exposure to. This could further increase mortgage costs in rural and remote regions and negatively impact small local lenders.

Of course, these developments are a particular concern to credit unions that often service rural and remote regions and with a membership that will face these practical consequences.

Thank you for your time.

We welcome your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Chris.

Genworth Canada, Mr. Levings and Mr. Macdonell.

[Stuart Levings, President and Chief Executive Officer, Genworth Canada]

Good evening. Thank you, Mr. Chair.

Genworth Canada is this country's largest private-sector mortgage insurer, with about 30% market share, and CMHC's largest competitor. The insurance we provide reimburses lenders for their losses when homebuyers default. Mortgage insurance is mandatory for homebuyers who put down less than 20%, and thus we serve primarily first-time homebuyers.

With insurers taking default risk, lenders are able to offer first-timer buyers competitive interest rates and to have confidence to do so across Canada and throughout economic cycles. We're housing-risk aggregators with specialized expertise. We're well capitalized, tightly regulated, and deeply experienced to properly manage mortgage-related risks.

Regarding the topic of mortgage rule changes, I will speak to two key points tonight.

First, the government has made numerous changes in the insured-mortgage segment over the past couple of years, some with impacts yet to be felt. To avoid a potential tipping point, it's critical that we take a pause and assess the cumulative impact prior to considering any additional changes, including the current risk-sharing proposal.

Second, the changes to date have largely targeted aspiring first-time homebuyers, making it harder for them to gain a foothold in the housing market today. Home ownership and the opportunity to build equity through the forced savings mechanism of a mortgage payment is an important cornerstone of the financial plan for many young families. We believe they aren't the problem and that further targeting of this segment is not the best solution.

Insured first-timers are the most tightly regulated and rigorously underwritten borrowers in the market today. These buyers reside in all regions across Canada, range in age from 25 to 40, and typically demonstrate stable employment, with average household incomes of $80,000 to $100,000. They buy homes they can afford, often below market averages, especially in Toronto and Vancouver. Their credit scores reflect fiscally prudent responsible borrowers, averaging a score of 752 last year.

Canada's mortgage finance system is a proven model. The rest of the world views our mortgage insurance structure as a best practice and a key contributor to our mortgage finance stability. During the global financial crisis, U.S. delinquencies rose above 5%. By contrast, Genworth's worst vintage year to date is 2007, which peaked in 2009 at 0.95%.

Our submission highlights nearly two dozen federal interventions since 2008, primarily targeting the insured market and first-time buyers. While many of these changes have contributed to the overall strength of our mortgage finance system, some may have gone too far. The most recent changes, last October, for example, are significant, the impacts of which are yet to be fully observed. I can't stress enough that it's going to take time before we know their total cumulative effect on the market.

We believe implementing any more changes could tip the market too far, creating the kinds of housing challenges these measures seek to prevent and hurting new buyers, existing homeowners, and the broader economy in the process.

Let me address the last two changes specifically.

In December 2015 the government increased minimum down payments on homes selling over $500,000. While targeting the strong Toronto and Vancouver markets, these changes had an impact on other markets too. Calgary, in particular, was hit quite hard, with approximately 12% of insured buyers affected by the change. As you know, this market was already under pressure and didn't need any additional cooling. In fact, only 13% of the Toronto and Vancouver buyers were making down payments small enough to be impacted, despite the much higher average price in these regions. Given how little the first-time buyer participates in these two cities, it's not surprising that, despite these and other changes to date, significant home price appreciation in Toronto and Vancouver continued.

National solutions are perhaps ill-suited to address local market challenges. Recently Vancouver's market has started to slow. However, it appears to be driven by a local solution to a local challenge—specifically, foreign buyers.

Last October brought more changes, including an interest rate stress test for insured buyers. While we support the concept of a stress test, we believe the target was set too high. Let me be clear; this was a significant change. Under this new test, approximately one-third of the first-time buyers we approved in 2016 would now be offside.

These buyers face stark choices: buy a less expensive home, perhaps a condo or a home further from work; ask their parents for more money; delay their purchase to save for a larger down payment; or consider a bundled loan from a private lender. It's this last option that should concern us most, pushing first-time buyers into the private lending space, a segment that continues to grow as mortgage insurance rules tighten. This segment represents a higher-cost option, with limited transparency and regulatory oversight.

To conclude, in 2010 the insured market represented approximately 40% of annual originations. With the cumulative changes, it's expected to drop to around 20% this year. Home prices and related mortgage debt are growing the fastest in segments of the market that are not accessible to first-time buyers, yet even though they're not driving the problem, they're the ones absorbing all the consequences, making it even harder for them to access responsible home ownership.

The big question we need to ask is this. What's the cumulative impact of all these changes for home prices, demand, first-time buyers, and the growing unregulated sector?

What should the government do? In our view, take a pause. Study the impact of all the changes made to date before considering any more. Second, if after that study it is deemed that more change should be considered, modify the stress test to better reflect future rate expectations. Third, given the number of potentially damaging consequences, do not proceed with a risk-sharing model. Finally, continue to work closely with other levels of government to study and address individual housing markets at the regional level.

Thank you for your attention to these issues. We're happy to take any questions you might have.

[The Chair, Liberal, Wayne Easter]

Thank you, Stuart, and thank you to all the witnesses for their presentations.

As I indicated earlier, before we go to Mr. Grewal and the first round of questions, we will ask the room to take a moment's silence in solidarity with the vigil outside for the Muslim communities of Quebec and Canada who have tragically lost someone.

[A moment of silence observed]

Thank you.

We will turn to Mr. Grewal and a first round of seven minutes.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

Thank you to the witnesses for coming today.

I've heard the word “pause” a bunch of times. I've heard that the government should pause and see the impact of the regulations. Thank you for making that so abundantly clear. I couldn't agree with you more that we should pause, because I think we're at a sensitive place in our housing market. There's regulation, which I think protects Canadians, but we also don't want to over-regulate this market, which would have negative economic consequences.

I want to get more information on the default rate. A few of you commented on the default rate and said that it's historically low. How does it compare to that of other countries, if you have that data? If you don't, it's okay.

[Alex Ciappara]

The CBA does collect data on mortgages in arrears. The mortgages-in-arrears rate right now is 0.28%. What that means is that about 1 in 350 mortgages is in arrears. You can compare that to the financial crisis, when that number went up to about 0.45% in Canada around 2008. In comparison, in the United States that figure went up to above 5%, which is 11 times that figure, which I think demonstrates the differences between the Canadian and U.S. markets.

If you go back further, you'll see that the mortgages-in-arrears rate has gone no higher than 0.65% nationally. There are some regional variations, but nationally that figure has been no higher than 0.65%.

[Raj Grewal, Liberal, Brampton East, ON]

Is there any insight into the economic slowdown in Alberta and default rates there in that regional market in Calgary?

[Alex Ciappara]

We do collect that data. We've seen a slight uptick in mortgage arrears, but it's manageable and the same thing on the consumer delinquency side where we've seen an uptick there. Because the books of the Canadian banks are just so broad, so diverse, they can diversify that risk to, say, other regions with lower mortgages in arrears like Ontario and B.C.

[Raj Grewal, Liberal, Brampton East, ON]

The arrears' number is one statistic and then I'm assuming there's another statistic for mortgage defaults, like actual power of sales. Has that increased in the last couple of years?

[Alex Ciappara]

We don't collect those figures, but I don't imagine their being particularly high, given that the mortgages in arrears are just so low. Because the mortgages in arrears are the mortgages that would then be in default, but quite often we would.... In the instance of the insured mortgages, which have the lowest amount of equity, the banks and other lenders would work with mortgage insurers to help keep the owners in their house.

[Raj Grewal, Liberal, Brampton East, ON]

Stuart.

[Stuart Levings]

Yes, I can speak to the foreclosure side. We deal with the first-time homebuyer and of course that does represent small down payments and naturally the highest risk segment of the market. We've seen an overall decline in the number of foreclosures over the last number of years.

Now that's obviously a function of both the strength of the economy and the housing market, and we know from experience that unemployment is the key driver of mortgage default and claim or foreclosure. Obviously, with the economy doing as well as it has been that has helped, but even when you go back in time to, say, the 2007 or 2008 time frame, our delinquencies were only marginally higher than what you heard from Alex as far as the overall CBA delinquency rate, and it improved over that period of time. That is a testament to a number of the changes that the government made that, as I referenced earlier, were positive and took out some of the marginal risk in the market.

We're at a danger now, as you alluded to, of tipping it too far by going any further. Those changes that were made early in the years of 2007, 2008, 2009, 2010, and 2012 were good changes and have helped to improve the overall performance of mortgages in this country, including the highest-risk mortgages or low down payment mortgages.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you.

In terms of application track, has there been an increase in the number of Canadians applying for mortgages on a year-over-year basis? That's a broad-based question, so anybody can respond to it.

[Stuart Levings]

I can certainly again speak to it from a first-time homebuyer point of view, which is the area we see. There has not been an increase. That market has been under pressure throughout most of 2015 and increasingly so into 2016.

Again, a number of changes were made. You've also had the ongoing affordability pressure that has really driven more and more first-time buyers out of the market, and the most recent round of changes were just another blow to that situation. For sure, the number of first-time buyers in 2016 was smaller than the number in 2015. We expect that to drop this year by another 15% to 25%, based on the changes that were made.

[Alex Ciappara]

It's a close figure, a correlation. You mentioned applications; we look at mortgage credit growth. In 2008 mortgage credit growth was about 14% per year. That has declined to about 6%, so mortgage credit growth has slowed.

In addition to that, the nature of that growth has changed in composition. In 2008 and 2009 about four out of 10 mortgages were insured mortgages. That has declined to about two out of 10 right now, so not only has mortgage credit growth declined, the composition of that credit growth has changed as well.

[Raj Grewal, Liberal, Brampton East, ON]

Is there an increase or decrease in the applications that are approved?

One is the statistic of how many people are applying for a mortgage. The second statistic would be what is the increase, or decrease, on approval numbers year over year?