Finance Committee on Feb. 8th, 2017

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Okay. Thanks. We have good media people to inform you of the major decision.

And as you said a few minutes ago, Mr. Mauris, it has a huge impact.

We all recognize that we have a difficult situation in Toronto and Vancouver.

Gentlemen and madam, you said quite clearly that the new initiative didn't address the average people who want to buy their first house, but can we at least say that the announcement in October was good to address the problems we had to face in Toronto and Vancouver?

Go ahead, Mr. Simonsen.

[Gary Simonsen]

Just to make sure I'm understanding the question, were you asking if the mortgage rule changes that were made in October were helpful to the markets in Toronto and Vancouver?

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Yes.

[Gary Simonsen]

They had some impact. One reason we've stressed the importance of expanding the homebuyer's plan for those individuals who would be impacted is that it allows them to apply some additional funds to qualify under the revised mortgage rules and under the stress test. They would then be able to, hopefully, qualify for something whereby they would have a higher down payment but would ultimately have to pay lower interest payments. They would then also not have to incur the cost of mortgage insurance.

It would certainly have an impact in that regard.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Would it be a positive one?

[Gary Simonsen]

No, it would not be a positive one in that circumstance.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

Mr. Mauris, it's your turn.

[Gary Mauris]

I don't know that they necessarily had a positive impact on Vancouver and Toronto. A lot of these policy changes really impacted first-time homebuyers. A first-time homebuyer today isn't a 19- or 20-year-old kid trying to trick the bank into giving them a mortgage loan. The profile of a first-time homebuyer is a young family, typically between the ages of 25 and 40. They have an incredibly high Beacon credit score averaging 752. They have a household combined income of between $80,000 and $100,000. These are real people who are raising kids, who make sacrifices to their community, who coach other children, and it was targeted at these people.

When I tie that back to Toronto and Vancouver, those first-time homebuyers, for the most part, are invisible in those markets. They are not buying in Toronto and Vancouver. They can't buy. The houses are so out of reach that they are buying in Chilliwack or they are buying in Guelph. They are buying in secondary markets.

Did it have a positive effect? I'm not sure that the tools the government implemented did much at all to really improve Toronto or Vancouver. I think what the provincial government did in British Columbia was very prudent. It was very regional and I think it had a very quick impact that was positive.

[Gérard Deltell, Conservative, Louis-Saint-Laurent, QC]

At least if all those new rules could have had a positive effect on Toronto and Vancouver, we could say, "okay, it was not so bad."

Gentlemen, I understand that you are saying that there was no good effect, either in the big city or for the average Canadian.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Simonsen.

[Gary Simonsen]

One of the themes we have heard here today is that we should take a pause. We need to assess what the impact truly is. We need to look at the data and look at the consequences in the marketplace, to let those play out and see what the results are. It's too early to truly understand what those results are. If you're going to be a data-driven organization and base decisions upon facts and data, then let's make sure we have that together. That's certainly one of the reasons we have strongly advocated taking a pause. Let's see what the impact is, not just in Toronto and Vancouver, but across the country.

[The Chair, Liberal, Wayne Easter]

It's your turn, Mr. Caron.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much, Mr. Chair.

I would like to ask for some clarification, as a result of Ms. O'Connell's question.

It seems that you were not informed or consulted about that series of changes. Is it usual to consult you when there are changes to mortgage rules of that kind?

[Adil Mawji]

I can take that question if you like.

In most cases, it is common knowledge or common behaviour for government to consult the industry. I can speak on behalf of Mortgage Professionals Canada, which has been a witness at this committee before. On a regular basis, they were consulted and did lobby in Ottawa and did have representation speaking with the ministers in the previous government, unlike with these last changes which no one was consulted about.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

So you feel that it is usual for you to be consulted and you certainly wish to be, correct?

[Adil Mawji]

In Alberta, no, but we work very closely with our national association and yes, they are usually consulted.

[Gary Mauris]

For many of the changes in the past, we've been consulted via associations that have worked with the Department of Finance. Prior to this previous government, our association and our industry had a very good working relationship with the Department of Finance, with Ottawa, and with the regulators.

[Gary Simonsen]

In terms of all the previous changes, I can't state categorically that we were consulted on all of them. There was certainly some consultation on prior ones, but not on the most recent one.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Okay, so—

[The Chair, Liberal, Wayne Easter]

I have a follow-up on that point. I won't take from your time.

What's been going through my mind is that there's a lot of secrecy around a budget, and there's very good reason for that. On this specific decision, wasn't it important not to let out of the bag in any way the decision that was going to be made and the impact it might have on the markets? Was there a valid reason for not consulting with the industry on this specific question, in terms of what that might do to the markets?

[Adil Mawji]

Absolutely. I can speak on behalf of Albertans. My colleague Katie testified that for the past two years Alberta has been suffering. Unlike the rest of Canada, we were a hot market for many years, and for the past two years we've seen the complete opposite, a reversal of our fortunes. These new rule changes have just kicked our province while we're down. There's no better word for me to explain it.

To answer your question, Ms. O'Connell, I'd say we've pushed out the bottom 20% of homebuyers—I can speak on behalf of Calgary—as they just cannot afford to buy in Calgary. There are no homes priced at under $150,000, and they were previously qualifying for a $225,000 to $250,000 condo. They're being forced to go back and enter the rental market, where we are even seeing higher vacancies due to lack of jobs. People can't afford to pay rent. They're moving back in with their families. We're seeing multi-generational housing at the forefront of...I can speak on behalf of my business. I'm 32 years old. People my age are moving in with their parents, and their parents are legalizing their suites.

[The Chair, Liberal, Wayne Easter]

That, Adil, though, is the consequence of the decision.

What I was asking is in terms of—

[Adil Mawji]

I was explaining why we should be consulted.

[The Chair, Liberal, Wayne Easter]

—the secrecy around the decision, which may have been necessary.

[Adil Mawji]

I still feel that you can speak to associations in confidence.

Even if you need to close the meeting, I still feel that you need to be able to consult professionals. We are experts in our field, and we're here for a reason.