Hill Week kicks off in Ottawa

Measures to improve affordability and access to the housing market for first-time buyers are top of the agenda as Mortgage Professionals Canada (MPC) sets off for Hill Week, a series of meetings on industry matters with federal policymakers in Ottawa.

The association will meet with members of parliament, senators and policy staff both in person and virtually throughout the week, putting forth proposals on a range of matters relevant to mortgage professionals.

MPC’s president and chief executive officer Paul Taylor (pictured top) told Canadian Mortgage Professional that the struggles facing prospective new entrants to the market would be front and centre in the association’s approach to the week.

“We’d like to see first-time home buyers promoted as the section of the community that should get some support,” he said.

“If you’ve been following the data across the last number of years, the insured mortgage share has significantly fallen, and the uninsured market share as a percentage has really grown. That’s all you need to know to see that first-time buyers have been pushed out of the marketplace, and investor purchases have started to increase.”

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The association’s recommendations are aimed at creating assisted measures for first-time buyers, Taylor said, with those proposals resonating with MPs who understand the problem that currently exists.

One of the key planks of MPC’s advice to lawmakers will be a proposal to allow qualified first-time buyers access to 30-year amortization periods for insured mortgages.

Taylor said that was “easily the most logical” approach to take in addressing the needs of first-time buyers, with little adjustment required for financial institutions from a systems standpoint.

“Bank systems are already configured to allow that type of a loan, and all of the underwriting criteria are also already programmatically built into the system,” he said. “So, it seems a no-brainer.”

The association will also push for an increase in the insured mortgage cutoff to $1.25 million (up from $1 million), indexed to inflation, a move that it said should be made as soon as possible.

Both the Liberal Party and Conservative Party included pledges to that effect in the most recent federal election campaign, although the item was omitted from mandate letters sent to the minister of housing and diversity and inclusion at the onset of the new parliament.

The current cap has been in place for about a decade with no inflationary adjustment, Taylor said, meaning that it will become increasingly less effective over time as property values continue to rise.

“Properties have appreciated 20% [in value] across the country in the last 12 months,” he pointed out. “So we’re only talking about a 25% increase on the limit in the face of a 20% increase in values in the last 12 months. It’s effectively an inflationary adjustment.

“The longer they wait, the less meaning it has – so we really would like to see that implemented quickly.”

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The stress test rate for mortgage qualification, a much-discussed topic in the industry since changes were introduced last June, is also set to feature prominently in the Ottawa meetings.

MPC is calling for the stress test level to be set at 2% above the contracted rate, with Taylor noting the association’s concern that current measures could risk weighing down on the housing and mortgage markets if they aren’t adjusted.

“What we’re more concerned about now is that the minimum qualifying rate starts to increase, and government and legislators don’t simply take comfort in the 200-basis-point flow that is already built into the mechanism,” he said.

“If we’re adding an additional 200-basis-point fictitious interest rate on top of the Bank of Canada’s inflation adjustments overnight, we’re very specifically targeting the real estate segment of the economy, causing further suppression in that arena compared to the broader economy.”

J.P. Boutros, MPC’s director, government regulations and regulatory affairs, told CMP that the association had consciously chosen participants to speak at a local level with political representatives, bringing local and regional issues to bear with relevant figures.

He said MPC had been working with federal and provincial levels of government on the oft-referenced supply issue currently afflicting Canada’s housing market, and said that municipal authorities also had a key role to play.

“The truth is when it comes to advocating for greater supply, it’s incumbent on the provincial and federal governments to incentivize provinces and municipalities to increase inventory – much the same way as they do with transit and health,” he said.

The week is an important one in the mortgage industry calendar for the year – particularly given Boutros’ assertion that the role of the mortgage broker is set to grow in prominence in the near future.

“Over the next six to 12 months, there’s going to be an even greater need for mortgage brokers, and I think there’s going to be growth in the industry,” he said.

“That’s not just primarily because of circumstances in the marketplace, but also because of the desire among borrowers to explore new options.”