Housing first, not politics

Earlier this week, all eyes were on the White House for the historic first meeting of President Trump and Prime Minister Trudeau.

While no official agreements were reached, by most accounts it was a positive first encounter between the two world leaders.

While many were disappointed and critical that Trudeau did not publicly denounce some of Trump’s policies, I believe our prime minister set the right tone and was wise to not engage in a political debate.

Canada and the United States share the world’s most successful trading relationship, and while the prime minister may have earned political favour in Canada for engaging in U.S. political advocacy, the decision to refrain and focus on a more cordial tone was, from my perspective, a wise choice.

Hopefully, in the future, this new relationship will result in agreements on softwood lumber and other trade related measures in a mutually beneficial manner.

With so much attention on their meeting, overlooked were recent changes coming to Canada’s mortgage regulations and—one in particular I would like to share more information on.

As a Member of the Finance Committee, one of the duties we perform is to hear from expert witnesses and industry stakeholders on how new or transformed finance regulations can impact Canadians.

As an example of this—with respect to the mortgage changes—the committee learned that for Canadians who might re-finance an existing mortgage, there are some potentially significant changes that may result in Canadians paying much higher interest rates.

Currently, Canadians who refinance a mortgage have the security of having that mortgage insured by the Canadian Mortgage and Housing Corporation (CMHC).

This guarantee means the mortgage is of low risk to lenders and, as a result, many lenders (including several private lenders) compete to offer competitive interest rates. 

This is often why homeowners will take advantage of re-financing a mortgage; the low interest funds might be used to invest in a small business, to finance home renovations or even help deal with a lifestyle change (such as divorce or a prolonged strike or lockout).

Debt consolidation is another potential factor. Whatever the reason you choose to refinance a mortgage, CMHC insurance is a protection available to Canadian homeowners. With the proposed mortgage changes, CMHC insurance on a re-financed mortgage will be taken away.

The lack of insurance of a re-financed mortgage does not mean you can’t still re-finance; however, without CMHC insurance, the interest rates will be considerably higher and there will be fewer competitors—as we heard from many expert witnesses at the Finance Committee.

From my perspective, these changes are puzzling. CMHC is not a program subsidized by Canadians.

Those who use CMHC services pay fees that not only cover the costs of CMHC, they turn a profit with net income in excess of $2 billion annually.

If anything, these changes will not only cost Canadians who re-finance more money in higher interest rates, they will likely also see a reduction in the profit created by CMHC derived from the user fees. 

So why is the Liberal government making these changes?

As yet, we don’t know. Several bureaucrats interviewed at the Finance Committee have yet to offer up a coherent answer.

As a result, I tabled a motion for Finance Minister Bill Morneau to attend in person to explain his decision.

Enough Liberal MPs on the Finance Committee supported the motion to pass it, and I will have a further update on this subject.

My question today is a simple one. Do you believe Canadians should continue to receive CMHC insurance on a refinanced mortgage? 

I welcome your comments and concerns on this—or any topic before the House of Commons. You can reach me by email at [email protected] or call toll free at 1-800-665-8711.


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About the Author

Dan Albas, Conservative member of Parliament for the riding of Central Okanagan-Similkameen-Nicola, is the shadow minister of innovation, science, economic development and internal trade, and sits on the standing committee on finance.

Before entering public life, Dan was the owner of Kick City Martial Arts, responsible for training hundreds of men, women and youth to bring out their best.

In British Columbia, Dan has been consistently one of the lowest spending MPs on office and administration related costs despite operating two offices to better serve local constituents.

Dan is consistently recognized as one of Canada’s top 10 most active members of Parliament on Twitter (@danalbas) and continues to write a weekly column published in many local newspapers and on this website.

He can be reached at [email protected] or call toll free at 1-800-665-8711.

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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