Evidence of meeting #71 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.

On the agenda

MPs speaking

Also speaking

Evan Siddall  President and Chief Executive Officer, Canada Mortgage and Housing Corporation
Steven Mennill  Senior Vice-President, Insurance, Canada Mortgage and Housing Corporation
Michel Tremblay  Senior Vice-President, Policy, Research and Public Affairs, Canada Mortgage and Housing Corporation
Rob Stewart  Associate Deputy Minister and G7/G20 and Financial Stability Board Deputy for Canada, Department of Finance

4:30 p.m.

President and Chief Executive Officer, Canada Mortgage and Housing Corporation

Evan Siddall

First, this question of the balance between access and financial stability is a core concern of CMHC. It sits in our legislative mandate that we're to attend to both. We worry a fair bit about achieving that balance.

Go ahead, Michel, if you have it there.

Michel Laurence, who just approached the table, is the person responsible for this, and has done a very good job in trying to close what we've identified as these data gaps. Michel will just share a little more.

4:30 p.m.

Senior Vice-President, Policy, Research and Public Affairs, Canada Mortgage and Housing Corporation

Michel Tremblay

Evan has mentioned a couple of them that we're really focusing on. One is investor demand for property. That again is the foreign investment but also Canadian investors, because as markets gain for a number of years, people start speculating that it's going to keep going, so they get into the market and start buying properties also.

As Evan mentioned, we're also looking at supply issues. We're trying to get data on supply, on what regulations exist across different municipalities that could slow down the response of supply to demand. Again, we'll have to collaborate with municipalities to get that.

Land availability is another thing we're looking at. When we did expert round tables as part of our national housing strategy, we heard this could be an issue. We're also looking at what motivates a homebuyer, and when to buy a house. Those are some of the data gaps that we're looking to fill over the next couple of years.

4:30 p.m.

Liberal

Raj Grewal Liberal Brampton East, ON

Is there any consideration of looking at the question of leverage in the market itself? How are people qualifying for mortgages? I've always felt we're not asking the right questions. This may not be in your mandate, but if you want to speak to it, I'd really appreciate it.

4:35 p.m.

President and Chief Executive Officer, Canada Mortgage and Housing Corporation

Evan Siddall

Yes, we've thought about loan-to-income. Before I get too far down this path, it's certainly our view that we need to digest the changes that were announced in October, and not to think about the next series of changes. But were the government to ask us about other policies, one such policy that's been enacted in the United Kingdom, for example, is a loan-to-income limit as a way of addressing the concern you mentioned.

4:35 p.m.

Liberal

Raj Grewal Liberal Brampton East, ON

Thank you.

Because the housing market is very regional, the story in Brampton East, in my neck of the woods, is a lot different from the story in Alberta that many of my colleagues talk about. Funnily enough, from one end of Brampton to another, the story is different.

What's happening in my city is that supply is really driving up prices. In January the forecast across the country for construction start-ups, again was at record highs. When I drive past a new open house or a model home, and there's a lineup of people willing to spend $700,000 and six hours in line to buy a house in the area they want to live in, and then I come back here and I hear all this testimony saying that the housing market is sound, there seems to be something wrong.

I know you're still looking at it. Would you say that today the market is stable and that Canadians are okay purchasing their homes with confidence?

4:35 p.m.

President and Chief Executive Officer, Canada Mortgage and Housing Corporation

Evan Siddall

We have one of the most admired housing systems in the world—deservedly so—and we've had it for a while. It's our job to make sure we continue that strength. I would say that, in general, we have a healthy market. We just don't want it to be overly healthy. Does that make sense?

4:35 p.m.

Liberal

Raj Grewal Liberal Brampton East, ON

It absolutely makes sense. Again, we go back to the balance. We are trying to achieve a balance between stabilization and access. I think we are achieving that balance, and it will be interesting to see how the numbers play out in the next couple of months.

Last question, just for my own personal—

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Your—

4:35 p.m.

Liberal

Raj Grewal Liberal Brampton East, ON

It's a really good question, Mr. Chair.

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

For fairness, I'll give you one question and Mr. Aboultaif one question.

4:35 p.m.

Liberal

Raj Grewal Liberal Brampton East, ON

Excellent. Ziad is a good friend.

In the history of the organization, when things have settled down or data points have changed, have you recommended policy to be retracted? Would you see a scenario, moving forward, when the stress test is taken away to stimulate more home purchases?

4:35 p.m.

President and Chief Executive Officer, Canada Mortgage and Housing Corporation

Evan Siddall

I don't know exactly what we've recommended, but certainly those policies have gone both ways over time.

4:35 p.m.

Liberal

Raj Grewal Liberal Brampton East, ON

So there have been corrections in terms of....

4:35 p.m.

President and Chief Executive Officer, Canada Mortgage and Housing Corporation

4:35 p.m.

Liberal

Raj Grewal Liberal Brampton East, ON

Thank you so much. I appreciate that.

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

Mr. Aboultaif, you have one very last question.

4:35 p.m.

Conservative

Ziad Aboultaif Conservative Edmonton Manning, AB

Thank you, Mr. Chair, and thanks to Raj, too.

The question is for Mr. Siddall. Last year, you made comments suggesting that the government should consider increasing the minimum down payment required to buy a house. The first part of my question is, do you stand by these comments? The second part is, is the government considering these changes?

4:35 p.m.

President and Chief Executive Officer, Canada Mortgage and Housing Corporation

Evan Siddall

Thank you for the opportunity to clarify what I said.

I did not, in fact, say that this was something the government should do. I said it was a policy that we should evaluate for the future. It's not a current concern.

As we look at a range of different alternatives for the market, which is CMHC's responsibility, that's one.

4:35 p.m.

Conservative

Ziad Aboultaif Conservative Edmonton Manning, AB

If you were to—

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

That was your one question. I'm sorry, Ziad.

We'll have to end it there, because we're into our next hour. Thank you, Mr. Siddall and those accompanying you. Thank you for your interventions and comments.

4:35 p.m.

President and Chief Executive Officer, Canada Mortgage and Housing Corporation

Evan Siddall

Thank you.

4:35 p.m.

Liberal

The Chair Liberal Wayne Easter

We will suspend for a couple of minutes while the parliamentary secretary and others come to the table.

4:40 p.m.

Liberal

The Chair Liberal Wayne Easter

For the second hour, which is now 45 minutes, on our study of the Canadian real estate market and home ownership, we have the parliamentary secretary, Ms. Petitpas Taylor, as well as representatives from the Department of Finance: Mr. Rob Stewart, associate deputy minister, and Ms. Leach, the chief of housing finance, capital markets division.

The floor is yours, Ms. Petitpas Taylor.

4:40 p.m.

Moncton—Riverview—Dieppe New Brunswick

Liberal

Ginette Petitpas Taylor LiberalParliamentary Secretary to the Minister of Finance

Thank you very much.

Good afternoon, Mr. Chairman and committee members.

I'm pleased to be here today to speak to you as parliamentary secretary to the Minister of Finance, the Honourable Bill Morneau.

I am also pleased today to be in the good company of Rob Stewart and Cynthia Leach, who will be here to help me if there are any questions that I need some assistance with.

One of the most important responsibilities of the government and the Minister of Finance is to ensure that Canada has a healthy, competitive and stable housing market.

This is why our government has been focused on housing issues since coming into office. This has included a series of carefully targeted measures to ensure stability and to promote affordability. Today I want to clearly explain the benefits of these changes and why our government has taken action.

Investing in a home is the single, largest, and most important financial decision most Canadians will make in their lives. Home ownership is vital to the economic and financial health of Canada and middle-class families. It is vital that we do what we can to ensure that the market is stable, and to provide peace of mind to homeowners across Canada. Especially in markets like Vancouver and Toronto, there is a risk that some middle-class families buying their first home could be taking on high levels of debt as house prices climb, reducing the likelihood that they would be able to afford their properties over the long term if economic situations or circumstances occurred.

Those who already own their homes want to know that the market is stable and that their most important investment is safe. We've heard that quite a bit during the testimony. Affordability and market stability are, therefore, issues that concern many middle-class families. These concerns are real, and this government takes them extremely seriously.

Last October, Minister Morneau announced tighter mortgage insurance rules—among other measures—designed to improve stability, reduce risk to taxpayers, and ensure that everyone is playing by the rules. The more robust mortgage rate stress test for insured mortgages is meant to ensure that Canadians are taking on mortgages they can afford, even if interest rates go up or if their income drops in the future.

Other changes were also made to target safer forms of lending. These measures are focused on addressing the buildup of housing debt across Canada. As you have heard, these measures will require borrowers and lenders to make adjustments in the short term. Fundamentally, these measures are important in containing risk to preserve the long-term stability of the housing market in Canada.

We have seen in other countries what can happen to the housing market and the overall economy when housing risks and leverage are not appropriately managed. In these situations, it is often the middle-class families who suffer the most. Ultimately, the government's efforts to contain risk in the housing market will support its plan to create conditions for economic growth over the long term, growth that will benefit the middle class and those working hard to make it to the middle class.

One fundamental point that has yet to emerge clearly in this committee is the fact that the government's support for the housing finance system remains significant, especially compared with other jurisdictions like the U.S., the U.K., and Australia. Mandatory mortgage insurance promotes the extension of low-cost credit to a large proportion of homebuyers—many of them first-time homebuyers—and mitigates risks to financial systems.

No other country supports mortgage insurance like the Canadian government does here at home. At the same time, discretionary mortgage insurance and government-sponsored securitization programs support access to low-cost funding for mortgage lenders. Some lenders have built their business models around this support, which will continue to be available for mortgages that conform to the new requirements. They can also continue to provide loans that do not meet the new requirements, but on an uninsured basis.

One element that we know we need to make greater progress on is a better understanding of the factors that drive developments in housing markets. This includes the impact of purchase by foreign investors on demands for homes, but it also includes factors that impact the housing supply. This is why in the 2016 budget the government provided funding to Statistics Canada to gather data on purchases of Canadian housing by foreign homebuyers. Work on this initiative is ongoing.

The government has also created the federal, provincial, and municipal working group of officials to review the range of factors affecting regional housing markets. In addition to sharing data and identifying information gaps, this group has been looking at factors relating to housing supplies in Canada. A healthy supply of new homes is an important component of any strategy to promote access to housing.

This brings me to affordability. Our government knows that it needs to work with provinces and municipalities to provide housing that meets the needs of the most vulnerable citizens. This is why it is also acting on affordable housing fronts.

In the last budget, the Government of Canada spent $2.3 billion on affordable housing. It will continue to work closely with the provinces and municipalities on this file. As you may know, the Honourable Jean-Yves Duclos, Minister of Families, Children and Social Development, is currently developing a national housing strategy.

We know that the financial security of Canadian families depends on sustainable debt levels and stable housing markets. The federal government takes its responsibilities seriously by making sure the housing policy framework remains healthy, competitive and stable and protects all Canadians and the economy from potential excess housing market volatility. That's why the Minister of Finance took action twice during the first year of our mandate and continues to follow the file very closely.

Measures that ensure a sound and stable housing market and financial security for Canadian families are part of the government’s economic plan. This economic plan is based on the notion that, when you have an economy that works for the middle class, you have a country that works for everyone.

As we look to the future with the goal of creating growth that benefits all of us, nothing could be more crucial than protecting what for many Canadians is the most important investment they will ever make in their lives. At every step of the way, our government will continue to listen to Canadians, homeowners, and stakeholders as it seeks to ensure a healthy and stable housing market for the benefit of all Canadians.

In that spirit, it gives me great pleasure to be here today to take some of your questions on behalf of the minister.

Thank you.

4:50 p.m.

Liberal

The Chair Liberal Wayne Easter

Thank you, Ginette.

Turning to the first series of questions, we'll go to about four and a half minutes each so we can get everybody in.

Mr. Sorbara.