Finance Committee on May 19th, 2020

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

In your comments, you also indicated that you thought that despite a reduction in the valley of the housing market, in one and a half to two years' time housing prices would be back to where we are now. Is that based on any sort of study you've done or data you've collected, or is it just a gut feeling? What's the basis for that?

[Evan Siddall]

It's the Bank of Canada's own graphs and some work we've done with the help of an outside economic entity, and then just reviewing other projections that have been done by banks, by Dominion Bond Rating Service and others. Is it a forecast or a guess? Don't take this forecast to the bank, but it's our best guess.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you.

[The Chair, Liberal, Wayne Easter]

We'll turn now to Mr. Fragiskatos.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Chair.

Mr. Siddall, taking mortgages off the balance sheets of banks is not unprecedented for CMHC, is it?

[Evan Siddall]

That's correct.

[Peter Fragiskatos, Liberal, London North Centre, ON]

At what other time did CMHC do this?

[Evan Siddall]

In the global financial crisis, we bought $69 billion of mortgages from banks. That was in the 2008-09 time frame.

[Peter Fragiskatos, Liberal, London North Centre, ON]

When that program wound down, how much revenue had been contributed to the CMHC's coffers?

[Evan Siddall]

Do you mean as a result of the IMPP?

[Peter Fragiskatos, Liberal, London North Centre, ON]

Yes.

[Evan Siddall]

Goodness, I don't have those numbers. I'll try to get that information right now, but we did profit. We did earn a spread on that money.

[Peter Fragiskatos, Liberal, London North Centre, ON]

In a CBC piece in 2012, it was reported that the CMHC estimated that by the time the program would have wound down, $2.5 billion would have been the amount of the spread. In fact, at the time the article was published, the Department of Finance was saying it had already gone to about $1.2 billion.

I know you don't have that in front of you, but—

[Evan Siddall]

I'll get you the numbers.

[Peter Fragiskatos, Liberal, London North Centre, ON]

That would be great.

On that spread, once it goes into the CMHC's coffers, how is it utilized by CMHC?

[Evan Siddall]

It's surplus income returned to the government in the form of deficit reduction. We did increase the fees this time. Last time, we charged a spread of 25 basis points. Right now, we've been charging 40 to 50 basis points for the program.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Then there's no reason to think the same sort of outcome is possible with this particular program recently introduced.

[Evan Siddall]

These are all insured mortgages that we're buying. Therefore, there's no credit risk inherent in the program.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Shifting to a different topic, on March 23, you put the following message on Twitter, “Please leave rent/mortgage relief to those who need it most. Banks and mortgage lenders are struggling to keep up. And if you have a paycheque and can afford it, please pay your bills. This isn’t an amnesty/freebie for all.”

I very much agree with you. You were speaking in reference to the deferral of mortgages among homeowners, that initiative. Is there any evidence you have at this point as to whether people are heeding that advice?

[Evan Siddall]

I'm not sure they're heeding my advice. It's probably read by four million people.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Are they at least living up the the spirit of what you called for?

[Evan Siddall]

I did go on a TV show on CBC to communicate the same message, because I thought it was important.

[Peter Fragiskatos, Liberal, London North Centre, ON]

You should take absolute credit, then.

[Evan Siddall]

Well, I can't.

The evidence is that there has been some non-payment of rent, and of course, deferral of mortgages that people have abided by. I was really signalling to people that if they have the money, our economy needs them to spend it. By and large, that has happened. There was a great fear in April that there would be a significant failure of rent payments. It was a little higher than usual. I had thought it would get worse in May, but it has not. Frankly, the income support program has been a big part of that.

[Peter Fragiskatos, Liberal, London North Centre, ON]

One question I've received from constituents about the recent rent assistance program that the CMHC is behind, along with the federal and provincial governments, is about the nature of the program and why it isn't mandatory. Would you have any thoughts on that?