Finance Committee on Jan. 21st, 2022

[Pierre Poilievre, Conservative, Carleton, ON]

If you add up those two numbers—$404 billion plus $460 billion—I get $864 billion. Is that the total value of the amount of money the government is on the hook for when it comes to backing up mortgages?

[Romy Bowers]

Thank you, Chair.

In response to Mr. Poilievre's question, the reason I hesitated when he first asked the question is that—

[Pierre Poilievre, Conservative, Carleton, ON]

Right—we don't have a lot of time.

[Romy Bowers]

I know those two numbers, but there's duplication, because some of the mortgages are—

[Pierre Poilievre, Conservative, Carleton, ON]

Yes, I know that. I know that, Ms. Bowers, but what I'm asking for is what is the total number. What I did ask you the first time is, what is the total number when you remove the duplication?

[Romy Bowers]

I don't have that number on hand, but we can certainly get that for you—

[Pierre Poilievre, Conservative, Carleton, ON]

Okay. That is very disappointing, because we're talking about hundreds of billions of dollars—

[Sophie Chatel, Liberal, Pontiac, QC]

Point of order—

[Pierre Poilievre, Conservative, Carleton, ON]

—of contingent liability.

[Sophie Chatel, Liberal, Pontiac, QC]

Point of order, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

We have a point of order.

[Sophie Chatel, Liberal, Pontiac, QC]

This way of questioning makes me uncomfortable in front of our witness.

I'd like Mr. Poilievre to be a tiny bit more respectful towards our witness, please.

[The Chair, Liberal, Peter Fonseca]

We have talked about respect and decorum, Mr. Poilievre, and avoiding cross-talk for the interpreters' sake, so let's try to stop that. That would be great.

Thank you.

[Pierre Poilievre, Conservative, Carleton, ON]

Well, it makes me uncomfortable that we have hundreds of billions of dollars of unknown contingent liability.

Ms. Romy, if people do default on their mortgages, your corporation then pays the default loss to the bank and taxpayers could be on the hook for that money, and the fact that you don't know the total amount of guarantees that your organization is offering on behalf of taxpayers to our banks is problematic.

I'll explain why. If our housing prices simply went back to the level they were at in 2020, that would be nearly a 25% reduction in house prices, and if people defaulted on those houses, many would be under water, so taxpayers would then have to pay for the default loss. I would expect that the head of the corporation that is managing these liabilities and this risk for taxpayers would know the numbers and have them at their fingertips.

I want to go to Mr. Routledge now to talk further about the risks. What percentage of new mortgages last year were variable rate...?

[Peter Routledge]

Roughly 51% or 52%.

[Pierre Poilievre, Conservative, Carleton, ON]

That's an unusually high share, isn't it?

[Peter Routledge]

It is unusually high, and it's—

[Pierre Poilievre, Conservative, Carleton, ON]

So when rates rise, those people are immediately going to have higher payments, aren't they?

[Peter Routledge]

You're right. That is a correct statement. We have—

[Pierre Poilievre, Conservative, Carleton, ON]

Yes. What percentage of households that have gotten mortgages in the last year have done so with 5% down?

[Peter Routledge]

What per cent of mortgages, Mr. Chair, have 5% down...?

[Pierre Poilievre, Conservative, Carleton, ON]

Yes—a down payment of 5%.

[Peter Routledge]

I would have to look into that and come back to the committee, and I will do so.

[Pierre Poilievre, Conservative, Carleton, ON]

When you do make a 5% down payment, you have to pay mortgage insurance to CMHC or the other providers, and that is tacked onto the value of the mortgage, isn't it?

[Peter Routledge]

Typically, yes. That's—