HALIFAX, Sept. 25, 2017 /CNW/ - Paul Taylor, President and CEO of Mortgage Professionals Canada will be traveling across Atlantic Canada to meet with local community leaders and senior government officials to discuss issues of housing affordability, availability and accessibility. Paul will focus his discussions around the negative impacts that the federal mortgage insurance and eligibility changes are having on first-time homebuyers in the four provinces.
"I am pleased to be in Atlantic Canada discussing how the impacts of the federal changes are impacting those in the region" said Taylor. "I am hopeful that this week's advocacy efforts can help inform Atlantic Canadians on the reasons why their housing markets may be slowing and encourage consumers to speak out against these policies."
The association's Atlantic Canada members are very concerned with the negative economic impacts that these recent policy changes are having on housing activity in the region. The policies, designed to cool the hot markets of Toronto and Vancouver, have generated negative results for Atlantic Canada's housing market, and placed additional costs on middle-class consumers through higher rates and reduced purchasing power. According to a report issued by the Canadian Real Estate Association, modest price growth is expected in 2018 for Prince Edward Island, New Brunswick and Nova Scotia, with prices declining in Newfoundland. PEI's housing price growth is expected to slow from 7.4% in 2017 to 0.2% in 2018; New Brunswick's growth is expected to slow from 4.4% to 2.2% and Nova Scotia's growth is expected to slow from 3.5% to 0.2%[1].
About Mortgage Professionals Canada
Mortgage Professionals Canada is the national mortgage industry association representing 11,500 individuals and 1,000 companies, including mortgage brokerages, lenders, insurers and industry service providers. Our members make up the largest and most respected network of mortgage professionals in the country whose interests we represent to government, regulators, media and consumers. Together with our members, we are dedicated to maintaining a high standard of industry ethics, consumer protection and best practices.
The mortgage broker channel we represent, originates more than 35% of all mortgages in Canada and 55% of mortgages for first-time homebuyers, representing approximately $80 billion dollars in annual economic activity. With this diverse and strong membership, we are uniquely positioned to speak to issues impacting all aspects of the mortgage origination process.
BACKGROUNDER
Who We Are
Mortgage Professionals Canada is non-profit industry association whose members include mortgage brokers, mortgage lenders, mortgage insurers and industry service providers. We have over 11,500 individual members and over 1,000 businesses across Canada. The mortgage broker channel originates approximately 35% of all mortgages in Canada and nearly 55% of mortgages for first time home buyers. This represents more than $80 billion dollars in economic activity.
Housing Market Outlook
In Atlantic Canada, the Canadian Real Estate Association has recently released numbers that show modest price growth is expected in 2018 for Prince Edward Island, New Brunswick and Nova Scotia and declines in Newfoundland. PEI's housing price growth is expected to slow from 7.4% in 2017 to 0.2% in 2018; New Brunswick's growth is expected to slow from 4.4% to 2.2% and Nova Scotia's growth is expected to slow from 3.5% to 0.2%[2]. Newfoundland is expected to improve slightly from 2017 from -4.3% to -1.9%. We expect growth to be even lower or declining should the federal government continue to move forward with more policies to limit demand.
Impacts of the Changes
CMHC's insured volumes fell 41% in the first quarter of 2017, including a 23% reduction in homeowner insurance and an 87% decline in portfolio insurance. The people that have most been impacted by these changes are first-time homebuyers needing mortgage insurance, which are more likely to be young Canadians from middle and low income families.
We believe that the cumulative impact of various policies has created uncertainty in the Canadian housing market. We acknowledge that the cooling of certain markets was the objective and seems to is showing signs of being achieved, at least in the Greater Toronto Area and to a lesser extent the Greater Vancouver Area. However, we are seeing reductions in housing activity, both sales and housing starts, in areas of the country that were already moderate, flat or even declining. We are concerned that the combination of all of the changes, and the speed with which they have been cumulatively implemented, have created some adverse effects which could cause a further, and potentially significant, decline in housing activity nationally. Homeownership is one of the best ways to combat asset inequality and ensure a growing and thriving middle class. Policies that make it harder for young people to purchase a home hurt the overall growth of the middle class.
What We Are Asking the Federal Government
- In light of all of the changes that have been made recently by both federal and provincial governments that the government slow down and hit pause on the measures yet to be implemented, most specifically its proposed risk sharing provision. We believe it prudent for the government to take 12-18 months to examine and assess the impact of these changes before proceeding with new measures.
- That the government adjust the November 30th change to allow for refinances to be included in portfolio insurance. If 80% LTV is unpalatable, please consider reducing the threshold to 75% rather than removing these products' eligibility altogether.
- That the government decouple the stress test rate from the posted Bank of Canada rate. Instead, set the stress test based on a market rate and consider having the Bank of Canada set a rate that is independent of the banks' posted rates. We recommend a stress test of 0.75% be used.
- For the sake of ensuring competition is maintained in as fair a manner as possible, OSFI should require all mortgages to qualify at the lower 0.75% stress test rate, not just insured mortgages. We have responded directly to OSFI on their propose changes to the B-20 Guideline.
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[1] http://www.crea.ca/housing-market-stats/quarterly-forecasts/
[2] http://www.crea.ca/housing-market-stats/quarterly-forecasts/
SOURCE Mortgage Professionals Canada
please contact: Paul Taylor, President and CEO, Mortgage Professionals Canada, O: 416-644-5465, C: 905-334-1165, [email protected]; Christian von Donat, Mortgage Professionals, Canada Public Affairs, O: 613-233-8906, C: 613-408-0498, [email protected]
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