Juno News - January 21, 2022


WATCH： Liberals get very upset when Poilievre asks questions about Canada’s housing market


Episode Stats

Length

6 minutes

Words per Minute

161.15297

Word Count

984

Sentence Count

82

Hate Speech Sentences

1


Summary


Transcript

00:00:00.000 What is the total dollar value of insurance in force at the CMHC?
00:00:04.500 Just the number, please.
00:00:11.280 So currently, our insurance in force is $404 billion.
00:00:21.500 And then what is the total value of guarantees under the National Housing Act,
00:00:27.680 mortgage-backed securities, and Canada mortgage bonds?
00:00:29.940 The total, please.
00:00:30.760 The total is $460 billion.
00:00:34.020 So if you add those two numbers up, $404 plus $460 billion, I get $864 billion.
00:00:43.840 Is that the total value of the amount of money the government is on the hook for
00:00:49.620 when it comes to backing up mortgages?
00:00:53.120 So thank you, Chair.
00:00:55.520 And just in response to Mr. Polio's question, the reason I hesitated when he first asked
00:01:01.180 the question is...
00:01:02.160 Right.
00:01:02.420 We don't have a lot of time.
00:01:04.240 I know those two numbers, but there's duplication because some of the mortgages are in the
00:01:08.860 spurtization number.
00:01:09.640 I know that.
00:01:09.880 I know that, Ms. Powers.
00:01:11.040 But what I'm asking for, what is the total number?
00:01:12.880 And what I did ask you for the first time is, what is the total number when you remove
00:01:16.040 the duplication?
00:01:19.320 So I don't have that number on hand.
00:01:20.920 That is very disappointing because we're talking about hundreds of billions of dollars
00:01:26.580 of contingent liability.
00:01:28.980 Point of order?
00:01:29.480 Point of order?
00:01:29.520 Point of order?
00:01:30.240 Yes.
00:01:30.560 Point of order?
00:01:30.800 Point of order?
00:01:31.240 This way of questioning, to me, make me uncomfortable in front of our witness.
00:01:38.040 I'd like Mr. Polio to be a tiny bit more respectful towards our witness, please.
00:01:44.660 We have talked about respect and decorum, Mr. Polio, and just crosstalk, so for the interpreter's
00:01:49.780 sake.
00:01:50.180 So let's try to just stop that.
00:01:52.080 That'd be great.
00:01:52.720 Thank you.
00:01:53.040 Well, it makes me uncomfortable that we have hundreds of billions of dollars of unknown
00:01:57.980 contingent liabilities.
00:02:00.140 Ms. Romy, if people do default on their mortgages, your corporation then pays the default loss
00:02:06.380 to the bank, and taxpayers could be on the hook for that money.
00:02:09.740 And the fact that you don't know the total amount of guarantees that your government, that
00:02:14.520 your organization is offering on behalf of taxpayers to our banks is problematic.
00:02:18.500 I'll explain why.
00:02:19.760 If our housing prices simply went back to the level they were at in 2020, that would
00:02:26.440 be nearly a 25% reduction in house prices.
00:02:31.820 And if people went defaulted on those houses, many would be underwater.
00:02:37.320 So taxpayers would then have to pay for the default loss.
00:02:40.400 And I would expect that the head of the corporation that is managing these liabilities and this risk
00:02:46.540 for taxpayers would know the number and have them at fingertip.
00:02:50.420 And I want to go to Mr.
00:02:51.780 Rutledge now to further talk about the risk.
00:02:55.800 What percentage of new mortgages in last year were variable rate?
00:03:03.340 Roughly 51% or 52%.
00:03:05.960 That's an unusually high share, isn't it?
00:03:08.080 It is unusually high, and it just…
00:03:11.300 So when rates rise, those people are immediately going to have higher payments, aren't they?
00:03:16.000 Mr. Chair, you're right.
00:03:17.580 That is a correct statement.
00:03:18.880 And what percentage of households who've got mortgages in the last year have 5% down?
00:03:30.560 What percent of mortgages, Mr. Chair, have 5% down?
00:03:34.980 Yeah, a down payment of 5%.
00:03:35.760 I would have to look into that and come back to the committee, and I will do so.
00:03:42.480 And when you do make a 5% down payment, you have to pay mortgage insurance to CMHC or the
00:03:48.380 other providers, and that is tacked on to the value of the mortgage, isn't it?
00:03:53.740 Typically, yes.
00:03:54.800 Yes.
00:03:55.100 So for a 5% down, you have to pay 4% in mortgage insurance fees, which means that once you subtract
00:04:04.420 the mortgage insurance from your down payment, you actually only have 1% net equity in your
00:04:09.660 house then, don't you?
00:04:10.420 All else equal, everyone's different, and I wouldn't make a broad statement.
00:04:16.260 So if someone's got...
00:04:16.880 Point of order, Mr. Chair, point of order, Mr. Chair.
00:04:18.880 Point of order, Mr. Chair.
00:04:19.880 Point of order.
00:04:20.880 I understand why the Liberals don't want these questions asked.
00:04:22.100 Point of order, point of order.
00:04:23.040 No, not at all.
00:04:24.040 Point of order, Mr. Chair, I can understand why these Liberals don't want these questions asked.
00:04:28.820 There's a point of order, Mr. Polyev.
00:04:30.360 Yeah, Ms. Zerowicz.
00:04:31.020 I actually think these questions are very important, but I also think the answers are
00:04:34.320 very important, and I feel like Mr. Rutledge isn't allowed to actually fully answer the question,
00:04:39.920 so I would ask that he be allowed to do so.
00:04:43.380 I want to...
00:04:44.380 I did, I have been taking timings here, and Mr. Polyev had 14 seconds, or the last one,
00:04:51.560 seven seconds, and he cut into Mr. Rutledge, who had one second and 0.41 to answer.
00:05:00.020 So, Mr. Polyev, equal time, please, for the witnesses to answer those questions.
00:05:04.140 Fair point.
00:05:04.780 I do want to thank Mr. Rutledge, because he has actually been offering direct answers to
00:05:08.360 the questions, and so if you've ultimately got 1% net equity in your house, and house
00:05:14.900 prices go back just to 2020 levels, so we're just talking going back to where they were
00:05:19.020 a couple of years ago, and they've dropped by 25% then.
00:05:23.400 You're 24 percentage points underwater in your mortgage.
00:05:27.620 Now, if you can't make your mortgage payments because you're on a variable rate, you've just
00:05:31.340 acknowledged that half of new mortgages are variable, and you default, then you hand your
00:05:36.840 house over to the bank in a 24% loss position, and the bank hends the bill over to Ms. Bowers
00:05:44.660 over at CMHC, who then passes it on to taxpayers in the form of mortgage insurance payment.
00:05:51.100 That is the risk that we're facing now, and I want to know what immediate action, Mr.
00:05:58.320 Rutledge, you're taking to address the high level of variable rate mortgages.
00:06:03.040 We have gone well over, we have gone well over your time, Mr. Polyev.
00:06:06.300 Thank you.