Thanks, Paul.

In our view, the new program is an academic approach to solving a problem that, based on precedence, is expected to have limited uptake. For comparison purposes, the concept behind the federal program will be familiar to B.C. legislators. The B.C. homeowner mortgage and equity partnership program ended March 31, 2018, just 15 months after it was introduced, due to its low participation rate. As the B.C. government stated when ending the scheme, “When the program was first introduced, it was anticipated it would provide 42,000 loans over a three-year [time horizon], however, as of January 31, 2018, there were fewer than 3,000 loans approved.”

A similar fate may be the future for the first-time homebuyers incentive program. While the federal program is not quite the same structure, some could argue that the B.C. program was more appealing to would-be home purchasers, providing interest-free mortgages with no required payments for the first five years. Loans of up to 5% for homes purchased under $750,000 were permitted, a considerably higher value than the maximum purchase price possible through the first-time homebuyers incentive program. In discussions with our lender and insurer members, an additional consideration identified is the very considerable IT infrastructure spending required to enable the program. Across the mortgage lending industry, the combined total expense will be significant. The required timeline to implement operational and technical changes is also creating concern in our community. We suspect that upon reflection, the required industry investment will prove excessive with the limited take-up received.

To our knowledge, the program was conceived and announced without significant industry consultation. As such, we have no understanding of the assumptions made to support the claim that the program will encourage 40,000 new first-time homebuyers to enter the market every year. This estimate seems unrealistic, given the limited take-up of past programs. We acknowledge that a number of details are still to come. For these reasons, we continue to recommend the reintroduction of a 30-year amortized insured mortgage for first-time homebuyers as a more practical, accessible and assistive measure. We are pleased that the leader of the NDP has publicly supported this suggestion.

We were disappointed not to see in the budget any amendments to the stress tests, given the continued reductions in real estate transactions across Canada, the significant price erosions now taking place in many regions and the highlighting of issues by members of this committee and senior officials of all political stripes who anticipated some adjustment to B-20. Critics have said that our recommended amendments will add fuel to house price inflation in hot markets. In our view, we're simply asking for a reduction in the suppression of activity we are witnessing with the stress test at its current benchmark or 2% level. We feel that a 75-point basis test would bring greater equilibrium to market activity, improving activity without adding excessive demand back into the market.

Last, regarding stress tests, I'll offer a word on our recommendation to permit borrowers who wish to move their mortgage at renewal to be exempted from the stress test. This is a supportive measure to ensure that Canadians who have a proven history of paying as agreed are able to access competitive interest rates and product offerings and not be restricted solely to their incumbent lender's renewal offer. Maintaining this provision is anti-competitive and anti-consumer.

Thank you for your time this morning and for providing us with the opportunity to share our thoughts and perspectives. We're happy to take any questions you may have.

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