Finance Minister Joe Oliver met with the Canadian Association of Accredited Mortgage Professionals (CAAMP) on Friday. The meeting covered a range of mortgage hot-topics.
CAAMP President & CEO Jim Murphy tells CMT, “CAAMP’s key messages were to provide consumer choice, for example the need to support smaller lenders and monolines, a view that we have had enough regulatory changes and the economic importance of housing and real estate finance in terms of jobs and tax revenues.”
“The Minister is monitoring the housing market,” Murphy says. “The sense is that no further regulatory changes are imminent, but that could always change.”
On consumer choice, CAAMP noted that banks control roughly 60% of the mortgage market. Programs that help smaller lenders fund their mortgages (e.g., Canada Mortgage Bonds and NHA MBS) are vital for supporting competition. Further limits to these programs would be negative for consumers and contrary to the government’s consumer agenda, CAAMP says.
One example is the current initiative to ban low-ratio insured mortgages in non-CMHC-sponsored securitization vehicles. Packaging insured mortgages in securities like asset-backed commercial paper (ABCP) is important for lenders who aren’t giant deposit-taking institutions. Without which, their liquidity is more limited and funding costs potentially increase, driving up their rates relative to big banks and reducing homeowners’ options.
It was also emphasized that housing is a major jobs generator. New home demand creates 2-person-years of employment per dwelling and tens of thousands of spin-off jobs. Moreover, stable and sustainable price growth creates wealth effects that support consumer spending. Given this and the balanced conditions outside of T.V.C. (Toronto, Vancouver, Calgary), CAAMP believes there is no need for further tightening of mortgage policy.