Though a few sparks flew between Dan Albas and one attendee of his town hall Wednesday evening, the Conservative MP largely echoed chamber of commerce concerns over mortgage changes.
The Penticton and Wine Country Chamber of Commerce hosted Albas at the Days Inn for a town hall, as the Conservative Party’s small business critic tours the country to gather opinions on issues like the small business tax changes proposed by the Liberal government. However, changes the federal Liberals brought in on mortgages, in October 2016 and January 2018, consumed much of the discussion.
“There was a lot of questions in regards to those, as people start to grapple with them,” Albas said. “There was a lot of real estate professionals here, whether they be realtors or mortgage brokers, or people who are in that industry and are affected.”
Albas spoke to a crowd of about 50 attendees, who pointed to examples of people who feel they have already been affected by mortgage changes. The changes were brought in to try to protect from potential high-ratio borrowers — those dropping 20 per cent or more on a down payment — who may default on mortgages. As well, it introduced a stress test for people applying for a new mortgage, refinancing or renewing their mortgages.
That stress test would ask some borrowers to prove they would be able to pay back the housing loans on a higher interest rate than the rate on their contract.
The changes come just over a year following tightening of mortgage rules regarding low-ratio borrowers, targeting those paying less than 20 per cent on a downpayment.
“However, we have become increasingly concerned about low-ratio mortgages,” the Bank of Canada wrote in October last year. “We are continuing to see an increase in new low-ratio mortgages that have riskier characteristics. More of these are being taken out by highly indebted households, and a growing share of borrowers is choosing an amortization period longer than 25 years.”
Albas set his crosshairs on the mortgage changes on Wednesday.
“The series of changes have made it far more difficult to become a homeowner. In other words, your buying power has been seriously reduced, and in some cases, eliminated outright,” Albas told the crowd. “The reality is for many Canadians that the Canadian dream to become a homeowner is no longer possible under these rules.”
One attendee, however, took some exception to that claim, pointing out that the Conservative government had introduced its own red tape through the Canadian Mortgage and Housing Corporation.
“All of the changes since 2008 have been working to address that exact situation, and they haven’t worked,” said the woman, who declined to provide her name, as she works at a major institution. “Shortening amortization didn’t work, limiting CMHC to $1 million didn’t work,” she added, referring to the changes in 2014 that ceased CMHC mortgage insurance on homes over $1 million.
Albas shot back — the two engaged in a back-and-forth over the issue, at times speaking over one another — claiming the changes under the Conservative government were not blanket changes explicitly aimed at cooling only the Vancouver and Toronto markets.
“There has been changes, and again, I’ve worked very much in touch with different stakeholder groups, and I did not hear Mr. (Jim) Flaherty or Mr. (Joe) Oliver say that those particular efforts were to cool Vancouver or Toronto,” he said, referring to two former finance ministers. “There is a particular bent in the way that these things were done.”
The attendee continued to challenge Albas on the issue, saying all changes impacted potential buyers, though she did agree with Albas that this year’s change was “a big one.”
“All of those other incremental changes have impacted people’s ability to buy and refinance,” she said. “You used to be able to (re-finance) through CMHC; you can’t do it anymore.”