Evidence of meeting #68 for Finance in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was changes.
A video is available from Parliament.
President and Chief Executive Officer, Canada Guaranty Mortgage Insurance Company
At today's current rate, if they're putting 5% down, off the top of my head, sir, it's probably in the $2,000 range.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
If that person were renting, would you say that's consistent for the equivalent property or would that be a higher amount or a lower amount?
President and Chief Executive Officer, Canada Guaranty Mortgage Insurance Company
A comparison between the cost to rent and the cost of paying the mortgage really depends on the location. As I think about that, $2,000 may be on the high side if it's a $300,000 mortgage at the current rates.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
Do you think the new mortgage rules are beneficial? I know you had some criticism of them.
President and Chief Executive Officer, Canada Guaranty Mortgage Insurance Company
I take the view, and Canada Guaranty takes the view, that the successive measures the government has taken over the years have been a net positive. We support the concept of a stress test. We think that's appropriate. We think that's prudent. We could debate the aspect of how many basis points above today's mortgage rates would be appropriate, whether it's the current 200 points or 100 points, but I think that's a different type of debate.
We take the view that the stress test is prudent. We would remind the committee, though, that the stress test is being applied only to the insured marketplace as opposed to the entire marketplace, so that level of prudence is being applied to about 30% of the marketplace.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
How long do you think you should monitor the new policies?
I'll give you an example. British Columbia implemented a 15% foreign buyer tax around six months ago, and already they're amending it to allow people with work permits to be exempt from that 15% foreign tax.
I'm just wondering. They seem to be very knee-jerk in reacting and then very quickly falling back, or is it a test of how the economy is going? What are the tests or metrics we should use to monitor the current mortgage rules, particularly stress tests?
President and Chief Executive Officer, Canada Guaranty Mortgage Insurance Company
These changes are certainly not immaterial. In fact, they're quite significant. From a timing point of view, we'd like to see the rest of 2017 play out.
I think you need to look at a number of different metrics: the number of transactions, the impact on the rate of home ownership, the impact on house prices. You heard from some of my colleagues on the panel that there are distinct regional considerations. The fact that this is a national policy lever can be very problematic when you look at the different marketplaces. There's Toronto, Vancouver—and Vancouver is starting to show some softening—and then there's the rest of the country, and the rest of the country is behaving in a much different way from those major urban centres.
I would like to see at least a year.
Conservative
Conservative
Phil McColeman Conservative Brantford—Brant, ON
Thank you, Chair.
Thank you, witnesses, for being here.
The first question is for each one of the organizations. Prior to the October changes that the Minister of Finance announced, were you consulted?
Nova Scotia Home Builders'...?
Conservative
President and Chief Executive Officer, Canada Guaranty Mortgage Insurance Company
No.
Conservative
Phil McColeman Conservative Brantford—Brant, ON
Okay, so if you had been consulted, you might have been able to advise about the unintended consequences, or the consequences you've explained as witnesses here tonight. I see a shaking of heads that maybe you would have introduced some of those things as possibilities. Thank you.
Let's move on to the affordability issue. Every time costs are added to a house, there's a price bump to the consumer. How many people—first-time homebuyers—are taken out of the marketplace?
Does the Canadian Home Builders' Association have any statistics on that? Mr. Finnigan or Mr. Burggraaf?
Jason Burggraaf Government Relations and Policy Advisor, Canadian Home Builders' Association
Our data is a few years old. We're in the process of updating it right now, but per $1,000, it was about 6,000.
Conservative
Phil McColeman Conservative Brantford—Brant, ON
Is that 6,000 people per $1,000 increase in the price of a house?
Government Relations and Policy Advisor, Canadian Home Builders' Association
Yes.
Conservative
Phil McColeman Conservative Brantford—Brant, ON
Mr. Finnigan, you said you were a builder and a developer. Over the course of your business in the GTA, what has been the largest increase over the years you've been in business to add to the price of a house?
President, Canadian Home Builders' Association
The biggest cost increase has been land.
Conservative
Phil McColeman Conservative Brantford—Brant, ON
Land. Okay. Is that because of the lack of availability of land?
