Finance committee  As an additional point of clarification on that, we also see slow single digit...but the majority of new people coming to Canada first get permanent residence, and then enter the housing market—not that many of them actually come into the housing market on day one, once they've immigrated to Canada.

Finance committee  It's a very difficult question because I'm very sensitive to piling on stimulus in a marketplace that is particularly heated. However, I would say that in that first-time homebuyer segment, sir, which represents less than 20% of the market, I believe there is room, particularly to adjust the 2012 insured purchase price maximum.

Finance committee  They would not be deemed to be insurable, sir. We look at the Bank of Canada's report on the percentage of the marketplace that's occupied by investors, and I don't have the Bank of Canada's precise definition in front of me, sir, but I would think that if I own one house, buy another house and rent out that secondary house, I would be deemed to be an investor.

Finance committee  We're not required by regulatory driver to match either up or down. That said, CMHC has historically been the price leader or price maker in a relatively modest-sized oligopoly. The majority of our lenders operate on a system-driven toggle, where they send x number of deals to CMHC and allocate x number of deals to Canada Guaranty and Sagen.

Finance committee  To answer your first point, our business and that of a mortgage default insurer is primarily focused on the first-time homebuyer. Seventy-five percent of our business is that first-time homebuyer, so that's absolutely our focus. To your second question, I referenced in my opening comments that the Department of Finance has a sandbox where they determine, along with OSFI, what products can be insurable.

Finance committee  Thank you very much. I would say that the larger issue for us, as house prices increase—and they've increased significantly—is the $1-million purchase price maximum, which restricts the mortgage default insurance from supporting first-time homebuyers' access in Canada's larger urban markets, where there's been a strong level of appreciation.

Finance committee  Within Canada Guaranty, approximately 80% of our existing risk in force is borrowers who are on a five-year fixed term, and I am going to assume that's equivalent or similar to our competitors I would say, sir, that the one-year to two-year fixed term is a very modest percentage of the total book, both from a portfolio point of view and from the point of view of new flow coming in.

Finance committee  Each year as an OSFI-regulated mortgage insurer we need to calculate the amount of potential claims that exist, or potential mortgage defaults that exist, within our portfolio—both what's in our existing portfolio, and also, sir, the new flow of volumes coming in. Each year we do an actuarial analysis to ensure that we have more than sufficient reserves to pay potential claims in a variety of economically stressed environment.

Finance committee  It's based on a variety of economic scenarios. The number one reason for a mortgage default in Canada is unemployment rates. That's the number one consideration and factor, and our actuarial analysis incorporates a number of base scenarios and stress scenarios, as I said, to ensure we have sufficient reserves to pay for ultimate claims.

Finance committee  With regard to the number that we're seeking, we're generally comfortable with the platform that was expressed, I believe, by the government, which moved from $1 million to $1.2 million. Our sensitivity, sir, is that the $1-million purchase price maximum was put in place in 2012 when home prices were fundamentally lower than what they are today.

Finance committee  Mr. Levings, do you want to go first?

Finance committee  Yes, I would agree with the essence of what Mr. Levings has indicated. I would point out, sir, that the RMBS market is still in its relative infancy. We have seen a variety of RMBS issuances. We think that's going to continue to grow and develop, albeit not perhaps at the pace the industry would want to see it develop at.

Finance committee  That's a very thoughtful question because the seven-year and the ten-year mortgages have existed in Canada for a fairly significant period of time. In my background and experience, we have only seen modest uptake of that seven and ten year historically. It's largely in eastern Canada and more rural markets of the country, perhaps.

Finance committee  Low interest rates have resulted in homebuyers having a much stronger personal balance sheet, and from the pandemic itself with the change to hybrid work from home. If I could provide any perspective to your consultations, my last two comments are to avoid arbitrarily decreasing mortgage insurance premium rates, and to increase and index the current $1-million purchase price cap on insured mortgages to reflect the substantial increase since 2012.

Finance committee  Good morning and thank you very much for the introduction, sir. I'd like to thank the finance committee for the opportunity to participate at today's hearing. Canada Guaranty is a 100% Canadian-owned private mortgage default insurer competing against the government-owned CMHC and Sagen in the private sector, which is here today.