Human Resources Committee on Oct. 30th, 2023

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Bowers.

Thank you, Ms. Chabot.

We'll have Madame Zarrillo for two and a half minutes.

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

Thank you, Mr. Chair.

I'm going to revisit the comments, Ms. Bowers, on the acquisition fund.

This is something the NDP has been calling for, and for quite a while. My colleague Jenny Kwan has been asking for it.

Is that a recommendation CMHC would put forward, or even Infrastructure Canada, to the government—create an acquisition fund to get some of these affordable rentals into public hands?

[Romy Bowers]

Thank you very much for the question.

I feel it is one tool that could be used to preserve existing housing stock. My position is always that it's good to preserve existing housing stock.

However, as I mentioned, we need to increase the number of social housing units. I think we need to combine an acquisition fund with continued investment in the creation of new stock in order to expand the social housing stock that exists in the country.

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

I'm hoping there will be some standard of maintenance requirements for folks who take on that new stock.

I'm going to my last question, because I don't have much time.

Between 2006 and 2015, Conservatives lost 800,000 affordable homes. Under the Liberals, loss continued at a rate of 15 units to one—that's 15 lost affordable units for every new unit built.

My question, Ms. Bowers, is this: Why have we lost so much affordable housing?

[Romy Bowers]

This is a complex question, and it's hard to answer in one minute.

I would say the lack of housing supply together with the mismatch between the high demand for housing and the low supply creation abilities of the country have made existing housing stock a very valuable asset. In a market system like ours, when there is a supply shortage, it makes the price of existing assets much higher and more valuable. There's been a lot of profit motive for for-profit companies to purchase these units and renovate them. I think that's what has resulted in the loss of this housing stock.

I would like to note that from our perspective, the solution is to expand housing stock in general. I feel that unless you do that, you're not going to stop the erosion of the deeply affordable housing stock.

[Bonita Zarrillo, NDP, Port Moody—Coquitlam, BC]

Thank you, Ms. Bowers.

It goes back to my earlier question: The Government of Canada needs to know how many empty homes are out there in Canada. They need to know that number. I agree that we need more supply in the affordable housing space. We also need to know how many are sitting empty, because we do not have the time to build every unit. We may be able to find some that we can use as a government now. The urgency is intense.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Zarrillo.

Next we have Ms. Ferreri for five minutes, please.

[Michelle Ferreri, Conservative, Peterborough—Kawartha, ON]

Thank you, Mr. Chair, and thank you to our witnesses for being here today.

Ms. Bowers, how many mortgages do you believe will default in the next 24 months?

[Romy Bowers]

I can only speak about the mortgages on CMHC's books. We are a mortgage insurer. We have a pretty good sense of the state of the mortgage market by monitoring our balance sheet. We're very conscious of the impact that high interest rates are having on Canadians.

Right now, we are looking at the highest-risk mortgages in our book. It's about 2% of our mortgage book. About 6,000 households are impacted. We feel they're at the greatest exposure for loss, but we don't think there will be defaults unless there is a large spike in unemployment. Our arrears are at historic lows. As long as the employment picture is strong, we do not anticipate defaults.

[Michelle Ferreri, Conservative, Peterborough—Kawartha, ON]

Thank you, Ms. Bowers.

How many mortgages does CMHC hold?

[Romy Bowers]

Actually, I have that information for you, and I will provide it to you.

[Michelle Ferreri, Conservative, Peterborough—Kawartha, ON]

That's great.

You were here December 5, 2022. I asked you then the same question, and you had said that the arrears, or missed mortgage payments, were less than 0.5% at that time.

What is it now?

[Romy Bowers]

It has actually declined. It's 0.25%. It's very low, partly because house prices continue to increase in some markets. People have more equity. The employment picture for homeowners, at least, is very strong.

[Michelle Ferreri, Conservative, Peterborough—Kawartha, ON]

Thank you very much for that.

Ms. Bowers, you are at the CMHC, which is a Crown corporation. This means you answer to the minister. You are a government organization. You are run by the government, the Liberals.

How often is the Minister of Housing communicating with you on the projections of the interest rates of default mortgages and of the housing crisis that we're in?

[Romy Bowers]

I'd like to point out that the CMHC is an independent arm's-length Crown corporation. I actually report to a board of directors and a board chair on a regular basis. We meet with the board eight times a year.

We provide regular snapshots of the state of the mortgage market, including such things as arrears. We also discuss any concerns we have about our mortgage book, the results of our stress testing and other risk management practices.

[Michelle Ferreri, Conservative, Peterborough—Kawartha, ON]

Is the minister never directly giving you directives on the housing situation or what the expectation is in terms of managing housing?

[Romy Bowers]

We actually have a team that provides an analysis of the housing market, so we provide briefings to the minister through Infrastructure Canada on a regular basis, if that's the question you're asking.

[Michelle Ferreri, Conservative, Peterborough—Kawartha, ON]

It says the Crown corporation is “governed by a Board and responsible to Parliament through a Minister”, so your goal is ensuring that everyone living in Canada has a place to call home. I'm a bit confused. I would think you do have to be accountable to the minister, then.

[Kelly Gillis]

Perhaps I can help to provide some clarity—

[Michelle Ferreri, Conservative, Peterborough—Kawartha, ON]

Sorry, I will get it tabled. It's fine, because I have such limited time with CMHC. I know your infrastructure, Ms. Gillis.

I have one last question. I'm tight on my time here.

CMHC has a guideline. If you don't mind, Ms. Bowers, could you read into the record the expected or projected percentage people should be spending on their housing?

[Romy Bowers]

We believe that in order for people not to be in core housing need, they should not be spending more than 30% of household income.

[Michelle Ferreri, Conservative, Peterborough—Kawartha, ON]

Can you tell this committee the percentage of Canadians who use CMHC who are spending just 30% on their housing?

[Romy Bowers]

I don't have that information handy, but I can certainly provide it for you.

[Michelle Ferreri, Conservative, Peterborough—Kawartha, ON]

If you could table that with the committee, it would be very helpful.

A recent survey by RateFilter found that 62% of Canadians exceed the CMHC recommended guideline and are using 41% of their pre-tax income. What is CMHC doing to help bring down that cost, because that is obviously not sustainable for Canadians?

[Romy Bowers]

We are very acutely aware of the affordability challenges that Canadians face and we address this issue from a number of perspectives. We provide low-cost financing to reduce the cost of housing construction. We also have done numerous studies on the need to increase housing supply for there to be a better balance between housing demand and housing supply. We believe that ultimately that's the best way to address housing affordability in Canada.