Mr. Speaker, I rise to move that Bill C-108, an act to amend the National Housing Act, be read a second time and referred to committee.
This is an administrative bill whose purpose is to increase the ceiling of mortgage loan insurance under the National Housing Act. This will enable CMHC to continue underwriting home mortgage loan insurance within the legislative limit. Bill C-108 will increase the existing limit on outstanding loan insurance from the current $100 billion to $150 billion. The bill also includes a provision to increase the ceiling further through appropriation in the future.
Members of the House should know that CMHC loan insurance is self-financing and self-sustaining and does not cost the government anything. The mortgage insurance fund is regularly evaluated according to rigorous insurance principles and is fully adequate to cover all insured losses as well as overhead.
While the amendments contained in this bill represent administrative matters, passage of this bill is essential to the continued operation of CMHC's Mortgage Loan Insurance. Allow me to take a minute to explain why this bill is important to Canadians.
The desire to own a home remains very strong among Canadians. Yet many people who can afford the monthly mortgage payments are still unable to access home ownership because they find it difficult to save for a down payment for a conventional loan.
With mortgage loan insurance, home buyers can secure up to 95 per cent financing with a lender because CMHC insures the mortgage.
Because CMHC assumes the risk of borrowers defaulting, mortgage lenders are able to supply more mortgages to Canadians. By reducing the down payment required to purchase a home, the Mortgage Loan Insurance Program makes home ownership more accessible to moderate income households.
It is a vital component of ensuring that all Canadians, regardless of where they live, have equal access to mortgage funds needed to acquire decent, affordable housing.
Let me give you an idea of the extent to which Canadians depend on mortgage loan insurance in order to fulfil their dream of owning a home. Mortgage loan insurance has allowed many people to become homeowners, some who would not otherwise have been able to buy, others who would have been able to make their purchase sooner because of the lower down payment.
In 1994 alone, CMHC mortgage loan insurance helped to house over 300,000 Canadian families at no cost to the government.
My colleagues will also be interested to learn that this means that approximately 40 per cent of the residential mortgage stock in Canada has involved financing by CMHC mortgage insurance last year. Without mortgage loan insurance, Canadians who do not have a 25 per cent down payment would generally never have access to home ownership.
CMHC Mortgage Loan Insurance has demonstrated the flexibility to facilitate innovation in housing finance. This is a critical feature, given that the needs of mortgage borrowers, and the market within which these needs are met, are constantly evolving. In 1987, the program was improved to allow for the insuring of second mortgages, an innovation that has been particularly helpful to people who need additional money for renovation.
In the following year, the chattel loan insurance program was introduced as a five-year experiment to cover loans made on mobile homes and to help people who choose this kind of affordable home ownership. This coverage for mobile homes has now been made a regular part of the mortgage insurance program as per the announcement made by the the minister responsible for CMHC at the beginning of this year.
In 1992 the mortgage insurance program was expanded to accommodate the reduced down payment for first time home buyers making home ownership even more accessible to moderate income households.
This program, called First Home Loan Insurance, has provided Canadians with their entry point to home ownership. May I reiterate to my hon. colleagues that the success of this initiative has been achieved without any cost to the government.
We want to ensure that CHMC can continue to provide that kind of market support in the future. That is why this legislation is before the House today. CHMC is continually reviewing the Mortgage Loan Insurance Program and regularly introduces changes to make it more effective and more convenient for both approved lenders and home buyers.
By exploring new housing finance options for Canadians we are looking to promote greater choices, lower the costs, increase the accessibility of housing finance and assist borrowers to meet their financing needs within their own resources.
CHMC will continue to encourage innovation and creativity in housing finance through the Mortgage Insurance Fund to promote greater access to housing markets for the benefit of all Canadians.
Besides helping Canadians to become homeowners, CMHC mortgage insurance has been key to the health of the housing industry in Canada. By fully protecting approved lenders against default on the part of the borrower, mortgage insurance encourages investment in residential construction.
The federal government, through CMHC, has been providing national mortgage insurance for four decades. CMHC has remained a significant player throughout this time with a mandate from the federal government to provide mortgage insurance to support loans to all Canadian home buyers regardless of where they live in Canada at the smallest feasible down payment and the lowest feasible cost.
Today, the private housing market is able to meet the housing needs of the vast majority of Canadian households. There is no doubt that CHMC's Mortgage Loan Insurance has played a critical role in that achievement. CHMC's Mortgage Insurance Program experienced a record year in 1994 in terms of volume. A number of unexpected factors led to the significant increases in activity last year. Mortgage rates dropped to their lowest levels in 30 years, much lower than anticipated. Low inflation has kept house prices stable and more affordable.
As well, the rapid and continued success of housing stimulation policies, including the First Home Loan Insurance Program and the RRSP Home Buyers' Plan, contributed to record volumes of insurance activity last year.
When the Mortgage Insurance Company of Canada stopped underwriting new mortgage insurance business in April 1993, CMHC had to assume 100 per cent of residential mortgage insurance activity. Furthermore, a greater proportion of all mortgages have been insured by CMHC in recent years.
In 1994, CMHC insured 40 per cent of all residential mortgages initiated, up from 22 per cent in 1991. Because there is some lag time between insurance loans and receiving the reports from the approved lenders, it was only in 1995 that all the figures for 1994 were compiled. At that time it was realized that the $100 billion maximum aggregate loan insurance currently stipulated in the National Housing Act had been exceeded. For this reason the provisions of this bill are effective starting 1994. I hope members of the House will see fit to give swift passage to Bill C-108 so that CMHC can continue to promote access to home ownership through mortgage loan insurance.
As I have stated and as my colleagues are aware, the purpose of the bill is to increase the maximum aggregate mortgage loan insurance. This will enable CMHC to continue underwriting home mortgage loan insurance within the legislative limit. Considering the housing sector's importance to the well-being of the nation, CMHC is committed to a stable supply of housing that increases economic and social opportunities for all Canadians.
With CMHC's mortgage loan insurance program qualifying home buyers anywhere in Canada can secure up to 95 per cent of home financing with an approved lender. Mortgage insurance through CMHC also provides a means of introducing guarantees for innovative mortgage products to benefit consumers, for example mortgage backed securities which increase the pool of funds available for mortgages and competitive rates.
The corporation continues to develop new initiatives and adapt existing ones to meet the challenges of housing Canadians adequately into the new millennium. Among the new initiatives being examined are alternative financing mechanisms for homes such as reverse annuity mortgages and shared equity financing.
CMHC has a role to play in helping Canadians to access decent affordable housing. CMHC continues to provide social housing assistance to support more than 661,000 existing units that house over one million low income Canadians whose housing needs cannot be met through the housing market. This housing assists some of the most disadvantaged members of our society including seniors on fixed incomes, aboriginal people, persons with disabilities, single parent led families, social assistance recipients and the working poor.
To solve today's housing problems and define tomorrow's housing needs CMHC is involved in research and development both independently and with industry and government partners. CMHC's research into sustainable development, quality of life, housing technology and building science promotes good living environments that are safe, healthy and sustainable. As well CMHC is helping the Canadian housing industry to promote the Canadian housing system abroad by helping to develop housing export strategies to assist the Canadian housing industry to market Canadian housing technology, products and services in world markets.
Through its Mortgage Loan Insurance Program, CHMC continues to make housing more accessible for Canadians. The Corporation is also working to improve housing affordability.
The federal government through CHMC is committed to a stable supply of affordable and accessible housing that increases economic opportunities for all Canadians. CHMC's market housing programs promote affordable housing and equal access to financing through financial instruments such as mortgage loan insurance.
Moreover, CMHC provides mortgage insurance to all Canadians regardless of where they live in Canada at the smallest feasible down payment and at lower cost. To improve access to an affordable form of housing CMHC also provides mortgage insurance for manufactured housing, for example mobile homes. In January 1995 the minister of public works recently announced an expanded chattel loan interest program that includes resale of manufactured housing units.
CMHC also helps to ensure Canadians are well housed by pursuing and encouraging housing innovation and by developing national housing policies in concert with provincial and territorial partners, the housing industry and non-profit groups.
One important way CMHC levers the efforts of its partners in Canada's housing sector is CMHC's Canadian Centre for Public-Private Partnership in Housing. The Centre acts as a catalyst and a source of expert advice.
It brings together the public and private sectors, non-profit organizations and private citizens to develop low to moderate income housing projects without the need for government subsidies.
CMHC is also contributing to making housing more affordable through better housing regulations. The affordability and choice today program funded by CMHC encourages regulatory innovation in municipalities across Canada. The ACT program encourages the housing industry and municipalities to work in partnership to improve housing affordability and choice. More than 80 ACT projects are developing a wide range of practical approaches to streamlining approval processes, developing new forms of affordable housing, facilitating infill and conversion, and adopting alternative development and building standards.
As I have said Bill C-108 is an administrative bill. As my colleagues know, the bill is crucial to ensuring that CMHC can continue to offer mortgage loan insurance to Canadians. Through its mortgage insurance activities CMHC has been responsible for helping many Canadians become homeowners and we want to ensure that it can continue to do that.
I would like to take a few minutes to talk about a complementary initiative, First Home Loan Insurance, introduced by CMHC in February 1992, to make home ownership even more accessible for first time home buyers. Earlier this year, the Hon. David Dingwall announced that the maximum eligible house prices for First Home Loan Insurance were increased in 30 communities across the country.
This initiative allows more first time homebuyers to purchase a home with a down payment of as little as five per cent. Anyone who buys or builds a home in Canada as their principal residence is eligible for the lower down payment, as long as they have not owned a home at any time during the last five years.
First home loan insurance was initially in effect for a two-year period but was extended for an additional five years until 1999.
The 5 per cent down initiative has been a major success in helping to increase home ownership in Canada. Thanks to the reduced down payment home ownership has moved from a dream to a reality for the many Canadians who can afford monthly
mortgage payments but are having trouble saving for the down payment.
The statistics speak for themselves. Since November 1993 over 210,000 Canadian households have taken advantage of the lower down payment to become the proud owners of either a new or existing home. In April 1994 a survey of Canadians who bought homes with less than 10 per cent down showed that 72 per cent of them would not have been able to purchase their homes when they did without the reduced down payment.
The first home loan insurance initiative is constantly being monitored to ensure that it continues to meet the needs of Canadians. CMHC is committed to helping Canadians who desire to own a home and have the proven financial management capability to do so.
First home loan insurance is an excellent example of CMHC's ability to adapt its mortgage loan insurance activity to ensure that Canadians can enjoy the benefits of home ownership.
Allow me to speak on the importance of Bill C-108 by describing an initiative of CMHC which has as its foundation the flexible use of the mortgage insurance fund. I am referring to the Canadian Centre for Public-Private Partnerships in Housing which I mentioned earlier. Allow me to take a moment to provide the House with some details about the important work being undertaken here.
The partnership centre was established by CMHC in 1991.
Its objective is to bridge the public and private sectors to facilitate the production of cost-effective and accessible housing for low to moderate income households, including those with special needs. The centre ventures into new areas through such means as innovative financing and tenure arrangements.
Much of the centre's activities are accomplished at the grassroot level with a view to encouraging a wide variety of people active in their community to become involved in newly created housing partnerships.
The partnership centre identifies opportunities and brings together potential partners to develop and implement public-private partnerships. It acts as a source of best advice by offering an advisory service to potential partners to identify the key legal, financial and regulatory issues that need to be considered in structuring a deal.
Since its inception the centre has ventured into innovative tenure arrangements such as occupancy rights, life leases, equity co-ops, as well as a home ownership equity partnership program. As at the end of June of this year the centre had facilitated the realization of 79 projects totalling in excess of 4,200 housing units.
Allow me to take a minute to outline a few innovative projects that have been made possible by CMHC's Canadian Centre for Public-Private Partnerships in Housing.
Vancouver's Khatsahlano Equity Housing Co-operative offers affordable housing for families. Equity co-operatives are ongoing housing co-ops that are financed entirely or partly from the investment of their members.
Traditionally aimed at seniors, they are now becoming an affordable housing alternative for a growing number of Canadians. This project demonstrates that it is possible to provide families with affordable housing options in a market where starter homes are very expensive.
Two non-profit groups in the province of Quebec, both dedicated to helping people with psychiatric and developmental handicaps, are buying and renovating houses and will run them as group homes. In Montreal, Centre de crise "Le Transit" is purchasing a house in a mixed residential downtown neighbourhood to accommodate eight adult residents referred to them by city-run and charitable social services agencies.
A similar project in Granby will house 12 residents in a triplex being purchased by L'Autre Versant Inc., a local non-profit group organized five years ago to provide homes for people with psychiatric and development handicaps. Both these projects are being made possible thanks to CMHC-insured mortgage loans supported by the Partnership Centre.
Clearly CMHC's partnership centre and its innovative uses of mortgage insurance are making great strides in increasing the supply of affordable housing for low to moderate income Canadians including those with special needs.
As I have stated before, Bill C-108 is an administrative bill to facilitate the continuation of mortgage loan insurance under the National Housing Act. As my colleagues well know, CMHC has an important role to play in helping Canadians gain access to home ownership.
CMHC's mortgage loan insurance with its mandate to provide equal access to Canadians throughout the country is important to achieving that goal.
CMHC has a unique role of ensuring equal access to Canadians throughout the country. This is one of the major factors that distinguishes CMHC's operation from mortgage loan insurance operations. Without CMHC's commitment to provide mortgage loan insurance in the small communities of the country, places that
private insurers have not traditionally wanted to serve, many Canadians might not be able to buy homes.
Let me illustrate how important CMHC loan insurance is to Canadians in small communities. Take for example CMHC loan insurance activity in the municipality of Brooks, Alberta, with a population of 10,000. In 1994, 137 households were able to access home ownership thanks to CMHC's mortgage loan insurance.
This year, as of September 30, 153 households became proud homeowners, again thanks to CMHC. Make no mistake about it, if CMHC were not in the mortgage loan insurance business these 290 families in Brooks, Alberta, might not have been able to buy their homes. I would further like to point out that these 290 households represent 83 per cent of the total number of 349 households who bought homes in Brooks, Alberta, during that period.
The government knows just how much Canadians value home ownership. It represents a major portion of wealth accumulated by households. For some it is a source of retirement income. It is also an important component of quality of life.
We believe that every Canadian should have access to home ownership. CMHC mortgage loan insurance can turn the dream of owning a home into a reality. It is therefore critical that CMHC be able to continue to provide mortgage loan insurance to Canadians now and in the future. This is why I support Bill C-108.
I hope my colleagues will see fit to give swift passage to this administrative bill so that CMHC can continue to help Canadians realize their dream of owning a home.