Mr. Speaker, I rise to speak to Bill C-108 at second reading, a bill to amend the National Housing Act.
I can speak from firsthand experience of the federal government's concern in social housing matters. I am pleased to represent the riding of Etobicoke-Lakeshore where the government is funding projects such as Kilcooley gardens co-op and William Kinnett co-op housing, housing residents who are single parents and persons with disabilities.
I am proud to be part of a government that supports non-profit housing which promotes the security of tenure and a sense of community among its members. I can also speak to the benefits of Canada Mortgage and Housing Corporation's mortgage loan statistics.
In my riding of Etobicoke-Lakeshore from 1992 to October 1995 a total of 1,567 homebuyers took advantage of CMHC's mortgage loan insurance. Of these, 708 were first time homebuyers who were able to gain access to their home under the CMHC's first home loan insurance, the 5 per cent down program as we call it.
I am pleased to speak in support of the bill because I understand the crucial importance of it to ensure that CMHC can continue its mortgage loan insurance activity.
I am bewildered why certain members of the House are not able to support the bill. I can only assume it is because they do not fully understand the provisions of the bill and cannot appreciate the important role mortgage loan insurance will play in helping Canadians to gain access to decent affordable housing.
Many of my colleagues have already spoken to this issue. However, it is obvious the message has not gotten through. Allow me to spell it out one more time more clearly for the benefit of those having difficulty understanding why the bill is important to Canadians.
NHA mortgage loan insurance makes home ownership accessible to millions of Canadians regardless of where they live. This access is under similar terms and conditions with the smallest feasible down payment and at the lowest cost to borrowers. CMHC is able to provide this insurance at no cost to the government.
Bill C-108 is required in order for CMHC to continue to underwrite home mortgage loan insurance within the legislative limit. Let me be very clear on this point. If CMHC cannot continue its mortgage loan insurance activity, thousands of Canadians will not have access to home ownership. It is as simple and as serious as that.
NHA mortgage loan insurance works like this. Most lenders cannot make a mortgage for more than 75 per cent of the value of a property without mortgage loan insurance. This means those not able to save a down payment of 25 per cent would be locked out of home ownership without mortgage loan insurance. NHA mortgage loan insurance provides approved lenders with insurance against borrower default or residential mortgage loans.
NHA mortgage loan insurance allows Canadians to take out a mortgage with an NHA approved lender with a down payment of only 10 per cent of the property value or 5 per cent for first time homebuyers.
NHA mortgage loan insurance requires the payment of application fees and insurance premiums. It is not just handed out for free by the government. These premiums are charged as a percentage of the loan based on the amount of the loan and its ratio to the value of the property. Premiums are set so as to ensure the fund always contains enough to cover any claims.
Since mortgage loan insurance protects lenders against default losses, they are able to charge the borrower the lowest possible rate of interest, which means mortgage loan insurance plays a critical role in reducing the cost of home ownership for Canadians. It also plays a critical role in ensuring relative equal access to mortgage financing in all parts of the country. This access is made possible through the cross-subsidization of higher risk business against lower risk business. In this way the mortgage insurance fund is self-financing. In other words, it does not cost the government anything to provide mortgage loan insurance to lenders so Canadians can have access to decent affordable housing.
We recognized a few years ago that even a 10 per cent down payment was difficult for some people to manage which is why the government introduced the first home loan insurance initiative in 1992 and reduced the minimum required down payment to 5 per cent for first time homebuyers. The initiative was introduced for a two-year period but was extended for an additional five years until 1999.
As many members will know, this 5 per cent down initiative has been a tremendous success in helping to increase home ownership in Canada. By further reducing the minimum required down payment, home ownership has moved from a dream to a reality for the many Canadians who can afford monthly mortgage payments but who are having trouble saving for a down payment.
Certain members might not be aware there are Canadians who cannot afford a down payment of 25 per cent of the price of a home, even the most modest home. Are there members in the House who would refuse these Canadians a chance to become homeowners? I must assume my colleagues are not so out of touch with the economic realities facing many Canadians that they are not aware of the difficulties some people have in raising enough money for a convenient 25 per cent down payment. This is a reality for many people. That does not mean we should exclude them from access to decent housing. The government supports families and individuals who aspire to be homeowners.
We know many Canadians have a strong desire to become homeowners and we understand the tremendous importance of helping them to do just that. We know how important a home is to people not only in terms of an investment but for the impact on their quality of life.
When people are well housed, they are better able to participate in their communities. They enjoy a greater sense of control over their lives. It is no surprise that Canadians are willing to make great sacrifices to achieve home ownership. Saving for a down payment
is a major undertaking, yet Canadians do it willingly because they want to fulfil their dream of owning a home, a place of their own.
Perhaps it has been a long time since some members of the House had to worry about such mundane matters as saving money to buy a home. Let me tell them that a down payment even on a starter home represents a substantial amount of money for many Canadians. It is not easy to save for a down payment these days.
Does that mean we should just close the door on those people, tell them and their children that they cannot own a home? What kind of a country would we have if we did that? Certainly not a country I would want to live in I can assure you.
Home ownership is part of the Canadian dream, a dream which this government believes should be shared with all Canadians, not just a privileged few. We believe that all Canadians deserve the chance to become homeowners. We believe that the federal government should continue to play a role in helping them to do so. And we believe that NHA mortgage loan insurance is the best way for us to fulfil that important role at no cost to the government.
Millions of Canadians depend on NHA mortgage loan insurance. In fact, members of the House will be pleased to learn that more than 3.5 million Canadian households have been helped to purchase a home since the government initiated NHA mortgage loan insurance in 1946. That figure represents nearly one-third of Canada's housing stock. In 1994 alone, CMHC provided mortgage insurance for 40 per cent of all residential mortgages in Canada. That represents over 300,000 housing units.
In the riding of Calgary Southwest for example, from 1992 to October of this year, 5,600 households accessed home ownership through NHA insurance. Two thousand, two hundred and fifty of these households were first time buyers taking advantage of the lower down payment to become homeowners.
This year alone, more than 1,000 homeowner units were insured in Calgary Southwest under the NHA with over half, 538, being first time homebuyers. Obviously CMHC mortgage loan insurance is a huge success, a very popular vehicle for Canadians to gain access to home ownership.
Today we are presenting a bill to ensure that Canadians can continue to have access to home ownership, a bill that will ensure the continued operation of NHA mortgage loan insurance, a bill which is good news for all Canadians, a bill which this government would like to see passed.
Those members who oppose this bill should keep in mind the disservice they are doing to Canadians. Are Reform members aware that 63 per cent of the adult population living in rental accommodations plan on buying a home? Are they aware that 40 per cent of all residential mortgages finalized in 1994 were NHA insured?
Does that party know that 230,000 first time homebuyers would not have been able to purchase a home if not for the first home loan insurance initiative made possible by NHA mortgage loan insurance? Do they know that new construction to the end of October 1994 totals more than 24,000 units, including single detached homes, apartments, row houses and manufactured homes? Do they not realize the tremendous economic opportunities, especially the significant employment generation, resulting from all this activity, opportunities that would have been lost if not for NHA insurance?
As I have stated, the mortgage loan insurance has enjoyed overwhelming popularity over the years precisely because it is so crucial to helping Canadians enjoy the benefits of home ownership.
Opposing this bill means opposing the expectations of Canadians to become homeowners. Some might argue that the government should get out of the business of mortgage loan insurance and leave it to private industry. A little bit of thought on that subject would turn up some reasons why it is not a good idea to leave this important area to the private sector alone.
First, without CMHC providing mortgage insurance, Canadians would be at the mercy of a private sector monopoly. Higher prices and fewer choices would be the result. Housing would then be less affordable, especially for the first time homebuyers.
Second, we know from past practices of private insurers that homeowners in all parts of the country would not have access to mortgage insurance. What would happen to the many Canadians living in communities which the private sector would refuse to serve?
Historically we know that private insurers have underserved rural areas. If NHA mortgage loan insurance were not available in rural communities, many rural Canadians would have to leave those areas in order to access home ownership because there would be areas which the private insurer would not want to serve, make no mistake about it. What would happen to the people living there? Quite simply, they would have very limited access to home ownership.
As long as CMHC is around to provide equal access to mortgage loan insurance, we do not have to travel that ugly road. With CMHC in the industry, Canadians have continued access to low cost financing. Canadians living in areas of the country that the
private insurers will not or cannot serve are able to obtain housing financing at relatively equal terms and conditions.
It should be obvious to members that competition is the best way to keep prices at the lowest possible level to encourage innovation in the mortgage industry to meet the changing needs of Canadian housing finance consumers.
Millions of Canadians have benefited from NHA mortgage loan insurance in the past. Thousands continue to benefit each year. Members of the opposition should clearly understand and support this bill. I have to wonder why they are having such difficulty with this very simple issue.
The federal government has a constitutional responsibility for banking and finance. CMHC mortgage insurance and guarantee are a demonstration that the federal government is fulfilling this responsibility. Without CMHC there would be a federal policy vacuum in the system of housing finance. The result would be unequal access to home loans across the country. Furthermore, marginal borrowers could pay more for low down payment mortgages or have no access to financing altogether.
What is the motivation of those who question the crucial importance of NHA mortgage insurance? Surely it cannot be to save the federal government money. CMHC operates its mortgage insurance fund at no cost to the government. CMHC insurance is provided at no cost to the Canadian taxpayer. I repeat this. CMHC is required to achieve self-sufficiency strictly from the premiums and fees that it charges. CMHC is not part of the problem. In fact, it is part of the solution.
Members might be interested to learn that CMHC has returned to the Government of Canada over $1 billion since its incorporation in 1946. In addition, in 1992, $55 million was contributed to the government from the mortgage insurance fund.
We in Canada are fortunate to be one of the best housed nations in the world. There can be no doubt that NHA mortgage loan insurance has had a significant role to play in bringing us to that enviable state. If we are to maintain that high standard, CMHC must be able to continue providing NHA mortgage loan insurance so that Canadians will have relatively equal access to low cost mortgage financing today and in the future.
Yes, we are fortunate to have such a high standard of housing in the country. Over the years, with the leadership of CMHC in the housing sector, Canada has developed a broad range of housing expertise in the public and private sectors as well as in the academic community. We are willing to share that expertise with countries all over the world. Representatives from a variety of countries come to Canada to learn about our operations because they believe that we have not one of the best, but the best system of public mortgage loan insurance in the world and they want to learn about it.
I want to conclude by saying that CMHC involvement in the international arena is not limited to helping other countries develop mortgage insurance, it also shares and explores possibilities in many other areas. I ask all members to support Bill C-108, which will make it possible for all Canadians to have their greatest dream fulfilled: owning a home.