Mr. Speaker, I too wish to compliment the member for Chambly on the intent of the bill. There is no question that his heart is in the right place.
Many people in this House and most Canadians felt the shock of the greatly increasing interest rates about 10 years ago. I certainly did. Unfortunately while the intent of this bill is noble, when we get the past the intent to look at the effects of this bill and what would happen in the marketplace, the results may not be quite as noble.
Before I get into my short comments about this I would like to respond to a couple of comments that the mover of the bill from Chambly brought into the debate. First was the notion of there being some sort of ne'er do well doing in that this bill is not votable.
I think there are 30 bills brought forward. Of that I believe about six or eight are votable. The decision on whether a bill is made votable is based on the content of this private member's bill as tested against all other private members' bills.
Sometimes they are found lacking and sometimes they are not. My private member's bill was not votable. I felt badly about it but that is the way the cookie crumbles. We have to deal with it. Another item was brought into this debate. The banks are hugely profitable and therefore we should change this. The banks make all kinds of money and therefore nobody likes banks. I do not like banks any more than anybody else but banks are a part of our life. They are a necessary evil.
Banks have had an increase in taxes over the last few years of something in the region of 40 per cent. In fact they pay a fairly hefty bite of their profits as taxes.
As we all know banks have been increasing their service fees for everything because they are trying to get out of the cyclical nature of recovering all of their cost by interest as well.
The whole notion of the profitability of banks in this debate is a moot point. It does not have anything to do with what we are talking about. Banks make a contract to lend money to a client, the client makes a contract with the bank to repay the money.
If people wish and are in a position to prepay a loan for whatever reason, then it would be nice if the lender would be in a position to make it easy for them to do so. However for the number of people who would like to renegotiate loans when interest rates go down probably does not match the number of
people who would like to renegotiate a loan when interest rates go up. I do not think I have heard of anyone going into a bank and saying: "I understand that interests rates have gone up. Therefore I want to renegotiate my loan so I can pay more money".
A contract is a contract. When depositors put money on deposit and buy interest bearing certificates at a bank, the bank generally matches those deposits with lending.
Perhaps we should consider letting the marketplace decide. If it is in the best interest of the bank, and some do, to ensure that their customers are able to have more flexibility in their mortgage loans, then they could advertise that they will be prepared after one year to allow the customer to collapse the loan, prepay three months interest and be out of the contract.
Most banks have open mortgages, one-year mortgages, six-month mortgages, five-year mortgages and ten-year mortgages. The Home Builders' Association would like to see much longer term mortgages so that people would be able to lock into a mortgage, perhaps even over its life, until it is totally amortized. This is done in the United States. Then when someone buys a home they know what their payments are going to be from the time they make their first payment until the time they make their last and the vagaries of interest rates will not drive people out of their homes. That again is another debate and another story.
Some lending institutions will lend money for mortgages in this country this very day that consider their mortgages fully open and will allow people to prepay without penalty at any time.
We should allow the natural competitive forces in a healthy marketplace make these decisions. We have many fish to fry in this Parliament. We should let the private sector do what the private sector should do and not further involve the government in more details that should be handled by the private sector. We should be getting out of business, not getting into business.
While the member for Chambly brings to the House a well-intentioned motion perhaps it also contains a bit of quicksand. I would suggest that if people are looking at this and we absolutely must do something about it as a Parliament, we might consider this. When a mortgage institution or a bank lends money on a mortgage expecting to get a spread of 3 per cent between the people who are lending money to the bank and the people who are borrowing money from the bank, their profit is included in that.
Perhaps the banks might consider giving up their portion of profit. Certainly their expenses should be covered.
We are getting very complicated in this debate; at least I am getting very complicated. It is not really our decision and our job to decide what banks should do and how they should do it. That is a job for a free, competitive and open marketplace.