Finance Committee on March 26th, 2026

[Brian Torgunrud]

To be clear, our forecast is based on a survey of private sector economists, and so there's no distribution that has been built into the forecast per se. However, what we do have and do assume, and what the private sector economists assume, is that we will see a pickup in economic growth. They do believe that investments that are going to be undertaken, both by the government and by the private sector, will result in a meaningful increase in productivity, which we would expect, in turn, to lead to an increase in wages. I can't speak to the forecast aspect of this.

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

What are the assumptions for those forecasts, though? Are they the government's announcements? We just talked about the GDP being flat, and then, most recently, we saw 100,000 job losses in the first two months of the year. Obviously, that unemployment rate is growing. Then, comparatively speaking about other G7 countries, we are the only one that's shrinking. I just want to understand where the assumptions are for the forecast.

[Brian Torgunrud]

As I said, the assumptions come from the private sector economists. We are in the middle of surveying them again, but, based on their current published forecasts, they do not expect this weakness to worsen, to continue. They expect us to have an unemployment rate that's going to average about 6.5% over the coming year.

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

Do you not have the information on the assumptions?

[Brian Torgunrud]

No. These are assumptions made by the forecaster.

[Sandra Cobena, Conservative, Newmarket—Aurora, ON]

Okay. That's not a problem.

Mr. Boldt, Equifax Canada has shown that defaults are growing, not only for subprime borrowers but for more financially stable homeowners as well. They report that those with credit scores as high as 680 are struggling to pay for their homes. Is the department tracking the rise of financially stable homeowners struggling to pay their mortgages?

[Matthew Boldt]

The department, together with the federal financial sector agencies, have been monitoring household indebtedness as a financial system vulnerability for many years. The mortgage market plays a central role in Canada's financial system and the well-being of Canadian households, and the sound underwriting criteria that are outlined by OSFI and its supervisory guidance for uninsured mortgage lending by the Minister of Finance for insured mortgage lending are critical for making sure that consumers are resilient.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Boldt. We're going to have to end it there.

Thank you, Ms. Cobena.

We're going to continue now with Mr. MacDonald, for five minutes.

[Kent MacDonald, Liberal, Cardigan, PE]

Good morning, Chair.

Good morning, witnesses.

We talked a little earlier, and your comments were in regard to savings. We all went through the COVID period, and I think every household accumulated funds by not doing things we couldn't do or by staying at home. I refer to that because, prior to COVID, there were spending habits out there and debt formulas. Now that we're post COVID, we hear from Canadians about rising household debt. In your data and research, can you explain the breakdown? How much of it is in mortgage debt and how much of it is in credit card debt, the scenario?

[Matthew Boldt]

I think there's one overall stat, and the Bank of Canada published a research piece earlier this week that cited this. It's that about 70% of household debt is mortgage debt.

[Kent MacDonald, Liberal, Cardigan, PE]

How does that compare with the assets that people have in their homes, on a ratio basis?

[Matthew Boldt]

The underwriting criteria that lenders apply when they originate mortgage debt would make sure that mortgage credit is aligned with the value of the housing assets that people are borrowing to purchase.

[Kent MacDonald, Liberal, Cardigan, PE]

I don't know if you can answer this question or not, but are spending patterns changing over time in households? Is that something you track?

[Brian Torgunrud]

In what way?

[Kent MacDonald, Liberal, Cardigan, PE]

What are people spending dollars on? Is there more going to mortgage payments? Is there less going to consumer spending in that way?

[Brian Torgunrud]

There's no material change. There is a mechanical change. Obviously, when you have changes in mortgage rates, you can have higher spending on mortgage interest costs.

Some lower-income groups obviously rent a lot more, proportionately, than upper-income groups, so they've had some increases in shelter costs that they've had to face as well, but I think what we're seeing is that those forces are equalizing again. Rent prices are coming down, or inflation, I should say, is coming down, and mortgage interest cost inflation is very close to zero. At this point, it's actually below the level of inflation.

You will have periods of time where you'll have divergence in these patterns that is just mechanical, but I think we're getting back to a more balanced mix.

[Kent MacDonald, Liberal, Cardigan, PE]

In terms of the higher interest rates and higher inflation that we just lived through, both at about the same time, those would have been a large factor in rising household debt, I presume. Can you comment on that?

[Brian Torgunrud]

Yes, it was, for those who had taken out new mortgages during that period and those who faced variable-rate mortgages, and I think this was what we were alluding to earlier about the transition that people went through already. Those who had variable-rate mortgages faced higher costs during that period. Those who had three-year fixed mortgages and renewed at the peak faced higher mortgage costs, but now we're seeing the other side of that.

There's still some to come. There's still about 20%, I believe, of those five-year fixed mortgages that will reset at higher mortgage rates, but they're partially offset by three- and four-year mortgages that have gone from higher to lower rates and the variable folks who have been getting lower prices all along.

[Kent MacDonald, Liberal, Cardigan, PE]

You were starting to speak about some of the affordability measures that the federal government has put in, like affordable child care and targeted tax relief this year, and housing supports and the groceries benefit.

Do we have data yet to show how those are increasing Canadians' disposable income?

[Brian Torgunrud]

I do not have that.

[Kent MacDonald, Liberal, Cardigan, PE]

It's too soon.

When we talk about consumption, those impacts obviously are going to have a positive effect overall. It has to increase the disposable income. Canadians are going to have a little more to devote to consumer spending.

[Brian Torgunrud]

Yes, very much so.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. MacDonald. That concludes your time.

We will continue with Mr. Garon.

Mr. Garon, the committee has unanimously decided to give you an extra minute.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Madam Chair.

I want to thank my colleagues for their understanding. I really appreciate it.

In recent years, many people have said that the rapid population growth caused by immigration and other factors combined with a housing supply that has not kept pace may have put upward pressure on housing prices, because the number of homes available in the short term is fairly fixed.

As of late, the government has been boasting a great deal about having brought about a decline in the population for the first time in Canadian history. At the same time, we are seeing a slight ease in the housing market. Do you think that one has had an impact on the other?

[Brian Torgunrud]

I think it's clear that the demographic impulse we saw, particularly the increase in temporary residents, did have a meaningful impact. I think we saw it probably more in the rental market than we did in the homeowner market, but we saw it there as well.

You're absolutely correct that population, on a year-over-year basis, was negative for the first time this quarter. I believe most economists think this will now have the opposite impact on house prices going forward.