Finance Committee on Jan. 21st, 2022

[Romy Bowers]

I thank you very much for the question, but unfortunately I can't comment on the exact day of the rollout. However, I can provide a bit of explanation as to the nature of the program.

The question is in reference to the Canada greener homes program. It comprises three parts. The first part is delivered through NRCan, and it consists of a $5,000 grant, as well as costs for the energy inspection required to do changes and renovations to a home. CMHC is not involved in that.

What we are involved in is that in addition to that $5,000 grant, eligible homeowners can apply for a loan of up to $40,000 through CMHC. We are in the process of preparing the launch of the program, and we will be very happy to serve Canadians when we get the green light.

[The Chair, Liberal, Peter Fonseca]

Thank you.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

We're looking forward to it.

I have a point of order, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Go ahead, Monsieur Ste-Marie.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

I'd like to inform you that I am giving my next turn to Elizabeth May, who has some questions for Ms. Bowers.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you for letting me know. We will have Ms. May up when your turn is up.

Now, of course, we have the NDP and Mr. Blaikie for two and a half minutes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Earlier, Mr. Routledge, you said that about 25% of the market is investors at the moment. You've also said that about 50% of the mortgages in the last year were variable rate interest mortgages. Do you have a sense of how much of those variable interest rate mortgages are in the investor class versus for Canadians who are buying homes to live in?

[Peter Routledge]

Mr. Chair, that is a great question.

I don't have that information at my fingertips. I will look into it. It will be hard to find; I know that at the institution level it is confidential and strategic. I simply don't have the answer at my fingertips. I will look into it.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Okay.

Does that also mean that we wouldn't know the extent to which investors versus homeowners are exposed to the threat of default in the case of an interest rate hike?

[Peter Routledge]

Mr. Chair, whether an investor chooses a variable rate mortgage or a homeowner with one home chooses a variable rate mortgage, they're all subject to the same minimum qualifying stress test, which is the higher of 5.25% or the contract rate plus 200 basis points. The interest rate buffer, if you will, applies to everyone.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

The government in New Zealand has taken some action to say that to the extent that somebody already owns a property, for each subsequent property they buy there's an increasing amount of down payment that they have to provide. They've done that as a way to try to cool off a really hot housing market there.

I guess there are two sides to that. One obviously is that it reduces risk in terms of the possibility of default if the investor has more equity in the property they're purchasing, but it may also have a salutary effect on housing prices.

Do either you, Mr. Routledge, or you, Ms. Bowers, have some comment on that as an approach both to reduce risk and especially to try to cool off housing prices?

Maybe we will start with you, Mr. Routledge.

[Peter Routledge]

Mr. Chair, that's a rule specifically. At OSFI we are principles-based. That's an underwriting practice, and we would encourage the institutions we supervise to think about that. We don't currently have that specific and discreet rule, although we do have disciplines that say that if you as a bank are taking more risk, you should have more capital allocated against the loan.

In answer to your question, I would be hesitant to tie capital regulations to housing market price. Our job is to keep the system safe.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, Mr. Blaikie.

We are moving to the Conservatives.

Mr. Stewart, go ahead for five minutes.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Thank you, Mr. Chair.

My first question this time is for Ms. Bowers.

The last time, I was talking about some of the New Brunswick developers and maybe the odd Atlantic developer I have spoken to, and I think you said you had decreased red tape by 50%. Could you explain a little bit about how you decrease that and what it's actually doing?

[Romy Bowers]

Fair enough. I'll use that one example. When we were first tasked with the responsibility of rolling out the national housing strategy, we had a number of loan programs, and as we were setting up our processes, the actual processing time was almost nine months from receipt of the application to the release of funds. During the last couple of years, we have been able to shrink that length of time by about half. That's one example.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Okay. Are there any other examples that come to mind?

[Romy Bowers]

With respect to our mortgage insurance business, which can also be applied to developers, we have done a better job of triaging applications by risk. We have different processes for underwriting smaller credits versus larger ones, so we have tried to create some triaging in our underwriting processes to make the process go faster.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Reading into this triaging aspect, maybe this is a generalization, but I'm just curious about the following. Would you say the program is geared toward the wealthiest people being successful, or at least assisting the wealthiest people, the wealthiest developers, to be successful?

[Romy Bowers]

In response to that question, I would say that we have quite a diverse client list of developers. We serve developers across the spectrum, be they large or small. We have very good clients who we do a lot of business with in the Atlantic region but we also have developers in Toronto as well. We have a fairly diverse book in terms of the developers we serve.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

One of the complaints I've heard from developers is about the need for a quantity surveyor. Under CMHC programs it's difficult for Atlantic developers because there is only one such outfit in Halifax.

I've heard some complaints about this quantity surveyor. Could you explain how the quantity surveyor is benefiting this process?

[Romy Bowers]

With respect to that question, I would like to take that back. I'm not aware of this specific issue with respect to quantity surveyors. I will check with my team in the Atlantic provinces and provide a response to Mr. Stewart.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

What I've been told about the quantity surveyor is that some of the developments in Atlantic Canada outside HRM would be large enough in scope to warrant a quantity surveyor. What's your department doing to resolve this issue and when is it completed?

From what I understand, this need to have a quantity surveyor is putting projects at risk and dragging out the process substantially.

Are you saying you don't have any insight into how this is taking place?

[Romy Bowers]

I'm not aware of the specific issue, but I will consult with my operations team and get back to Mr. Stewart.

[Jake Stewart, Conservative, Miramichi—Grand Lake, NB]

Okay.

How much time do I have, Mr. Chair?