If we can focus our concern on first-time homebuyers, what seems to be missed is the benefit of building equity in a low interest rate environment. When interest rates are at their lowest, the biggest proportion of your monthly debt service goes towards the principal amount of that mortgage. The consequences of these new rules is restricting home ownership growth in Atlantic Canada and also ensuring that when people do buy in the future they are paying much higher interest rates.
As a builder and a real estate agent in Nova Scotia, the impact it's had on my business is huge. The Friday before the new home mortgage rules were introduced, I met with a young couple who were going to put an offer in on one of my new energy-efficient homes in Bedford. They were excited about buying their first home. However, when we met on Monday they no longer qualified. The result was that they chose to sign up and rent for another year, and they bought a new car instead. They are not even sure that under the new rules they will be able to make home ownership a reality in the next several years.
This not only impacted the young couple but also my business. The loss of revenue from sales impacts how we move forward as a company in the future. If this trend continues, we will continue to lay off employees and can no longer afford our subs. This is not good for an already slow economy. If you are going to put more restrictions on young people taking on debt from buying a home, why not restrict them from buying a depreciating asset like a car and create a forced savings plan for them so they will actually be able to save money for their new home?
I also want to draw attention to a statement we made in The Globe and Mail in regard to this issue. If first-time homebuyers default on their ability to pay their mortgage “at the same rate as the general public—which is less than 1 per cent—then the government has decided that protecting young people from themselves is more important than giving the remaining 99 per cent”, which represents the largest percentage of household asset wealth in this country, a chance at home ownership. This will limit “access to new home ownership and the benefits that come with it”.
We appreciate the opportunity to be here today, and we advise you to take action on our recommendation for regional housing rules. We have lost so many builders and potential homebuyers in the past few months in Atlantic Canada that it's staggering.
Thank you.