Lobbyists are funny, aren’t they?
It’s a fascinating job. Always has been. Always will be.
Just imagine when it’s your job to argue in favour of something that’s completely absurd. Or unpopular. Or dangerous.
Maybe it’s just lobbying itself that fascinates me.
Let’s pick a topic with absolutely zero controversy, like, say, Canada Post.
Canada Post lost $1.57 Billion in 2025 and is literally bleeding taxpayers’ money, and yet its members, leadership, and lobbyists are arguing not just in favour of its continued existence, but also for improved compensation.
That’s crazy, right?
But what would we expect? Do we think they’re going to issue a press release suggesting that Canada Post be shuttered? Do we believe they’ll fire their lobbyists and stop protecting their union members?
Of course not.
Every industry does this.
And just to show you I’m unbiased, I’ll tell you this: my industry is no different.
The Ontario Real Estate Association (OREA) is absolutely, positively, useless.
OREA used to be in charge of education, but when that was moved to Humber College in July of 2019, I wondered, “Why does OREA exist?”
I still wonder that.
They serve no purpose. Zero. Less than zero, since we have to pay fees to them, against our will.
I’ve been told, “OREA is now a lobbyist! They lobby for us, the membership!”
Sure they do.
Anything to justify existence…
Last week, I received an email with the following headline:
“Ottawa Is Keeping Canadians Out Of Home Ownership: Mortgage Brokers Seek Action On Affordability”
It’s blunt. It’s direct. It’s questionable.
It just reeks of lobbying, doesn’t it?
But who would send an email like this? Who would send out a press release with this type of title?
The Canadian Mortgage Brokers Association sent out this media advisory:
The Canadian Mortgage Brokers Association (CMBA) is calling on the federal government to overhaul restrictive mortgage policies that are preventing first-time buyers and leaving families unable to manage rising costs, by extending maximum amortization periods, restoring responsible refinancing for insured mortgages, and establishing a national down payment assistance framework with the provinces.
Fascinating!
“Restrictive” mortgage policies.
“Preventing” buyers from buying.
And you have to throw the word “families” in there, no matter what.
“Unable to manage rising costs.”
And so on.
I mean, who better to lobby the federal government to loosen mortgage reqirements than mortgage brokers, right?
I say this, of course, as a real estate broker who would potentially benefit from looser mortgage requirements, but I’m still going to point out the hilarity of the CMBA sending out such an aggressive press release!
Here’s the rest of the release:
Canadians are working harder and saving longer, yet homeownership continues to slip further out of reach. Many have stable jobs and can afford monthly mortgage payments, but federal rules stand between them and the front door. Before they can even worry about payments, aspiring buyers must clear the first and highest hurdle: saving for a down payment, with support that varies depending on which province they call home. Those who make it through face restrictive amortization limits that drive up monthly costs, while decade-old rules deny relief to homeowners with insured mortgages. CMBA, representing an industry of more than 45,000 licensed mortgage professionals, will outline three practical changes the federal government can make now. Building more homes is essential, but it will not solve the affordability crisis if Canadians cannot finance the homes being built. Canada does not have to choose between responsible lending and accessible homeownership.
What are these “restrictive amortization limits,” I wonder?
What would the CMBA have the federal government do to help Canadians achieve their homeownership goals?
1) CMBA is urging the federal government to extend maximum amortization periods to 30 years for all insured mortgages and allow up to 40 years for first-time homebuyers
2) CMBA is also calling on Ottawa to restore opportunities for eligible Canadians to refinance insured mortgages up to 90 per cent loan-to-value, subject to strict financial qualifications.
3) CMBA is further urging the federal government to establish a national down payment assistance framework, developed in partnership with provincial governments, offering government-supported, repayable loans to qualified first-time homebuyers.
Umm…. didn’t we spin our wheels with #3 on the list for quite some time? Are we back to suggesting that the government should loan money to people who can’t qualify for a mortgage so that they can qualify for a mortgage?
Excuse the sarcasm, folks. But don’t we routinely tout Canada as “having the safest banking system in the world?”
Isn’t this the reason why, back during the 2008 Financial Crisis, our country came out completely unscathed?
I’m not exaggerating.
October 9th, 2008: “Canadian Banks The Soundest In The World”
That ranking was based on interviews with 12,000 corporate executives around the world.
But that was then, and this is now.
And today, it would seem that there’s an appetite among Canadians to “loosen the purse strings” just a little bit so we can let more people qualify for mortgages, and/or let people qualify for higher mortgages.
President of CMBA, Jessica Rickerby, said:
“Canada does not have to choose between responsible lending and accessible homeownership. We can have both. The federal government has the ability to make meaningful changes now. The question is whether they are prepared to act.”
This is an interesting take.
“Responsible lending” versus “accessible homeownership.”
CMBA says we can have both.
So today, I want to outline five areas where the federal government and the CMHC could make changes to mortgage regulations, and I want the TRB readers to play King For A Day, and pick one from the list. I mean, if you absolutely had to.
If you’re a fiscal conservative like me, and you want to say “zero,” that’s fine too. But please just add “….and if I had to pick one,” then do so.
Sound good?
1) Extend mortgage amortizations to 40 years or beyond.
The United Kingdom has 40-year amortizations.
Spain and France have 50-year amortizations.
Finland has 60-year amortizations.
And Japan, as we’ve all undoubtedly heard, offers 100-year amortizations.
Let’s say that you’re buying a starter home in Toronto for $1,200,000.
You’re making a 20% down payment and looking to finance the balance at 3.79%.
On a 25-year amortization, you’re paying $4,117.59 per month.
On a 30-year amortization, you’re paying $3,709.66 per month.
That, of course, is why borrowers like longer amortizations!
Now, what if Canadian borrowers were routinely offered 40-year amortizations? Because on a 40-year amortization, the monthly payment be only $3,225.30 per month.
That would “increase affordability,” wouldn’t you agree?
The longer the amortization, the lower the monthly payment. We all know this, but eventually, the borrower pays down such a small amount of principal each month that you creep closer and closer to an interest-only mortgage.
Let’s look at our example above and determine how much interest and how much principal is paid each month in the first year of the mortgage:
25-Year:
Principal: $1,639
Interest: $2,479
40-Year:
Principal: $731
Interest: $2,494
With the 25-year mortgage, the buyer pays about 40% in principal and 60% in interest.
With the 40-year mortgage, the buyer pays about 23% in principal and 77% in interest.
Again, I’m pointing out the obvious, but I believe that a picture paints a thousand words.
Do we want to encourage borrowers to pay down less principal while paying more interest? If so, then where do we draw the line? Why not 50-year amortization periods?
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2) Lower down payment minimums.
I just read what I wrote, and I got the “ick,” as one TRB reader described last week.
I want to make it clear, in case it’s not already, that I’m not in favour of any of these changes. I’m merely looking to highlight what’s being discussed in lending, real estate, and political circles.
Back in 2007, I represented a client who purchased a home for $1,000,000. He provided a deposit of $50,000, and upon closing, his lender advanced $1,070,000.
That’s not a typo. His lender advanced $1,070,000.
He was taking advantage of a program called “107% Financing,” which offered buyers the opportunity to make a 0% down payment and have the lender finance the entire purchase amount, and, just for good measure, they would advance a further 7% in cash.
Times have changed.
The CMHC eventually introduced a minimum down payment of 5%, then a minimum of 20% over $1,000,000. Many years later, they increased the minimum down payment for a purchase amount from $500,000 to $999,999 from 5% to 10%, effectively increasing the down payment on a $999,999 house from 5% to 7.5%.
In 2026, the CMHC increased the “mortgage insurance cap” from $1,000,000 to $1,500,000, meaning that a buyer no longer needs a 20% down payment to purchase for $1.1M, $1.2M, $1.3M, or anything up to $1,499,999.
But should the CMHC go further?
Should that cap be increased to $2,000,000?
Or should the sliding scale be reduced so that buyers can purchase up to $1,499,999 with a mere 5% down?
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3) Eliminate the mortgage stress test.
It’s been ten years since we were first introduced to the mortgage stress test. In October of 2016, the stress test was implemented for insured mortgages, ie. those buyers with less than a 20% down payment.
On January 1st, 2018, the stress test was expanded to cover uninsured mortgages as well.
Along came COVID, of course, and that sent interest rates plummeting, while the market shot up like a rocket as a result. In June, 2021, regulations were expanded to ensure that the minimum qualifying rate was the higher of 5.25% or the contract rate of the mortgage + 2.00%.
At the time, people thought it was ludicrous!
Imagine having to qualify at 5.25% when you could obtain a mortgage for 1.49%?
Well, fast-forward to 2023, when the Bank of Canada rate increased from 0.25% to 5.00%, and borrowers saw mortgage rates approach 7%, and all of a sudden it became clear that the stress test saved a lot of people from themselves.
Think of all those people who wanted to buy in 2021 when mortgage rates were at all-time lows, but couldn’t qualify because of the stress test. Think about how “unfair” that was at the time. Now think about how screwed they would have been when their mortgage payments doubled, and they hadn’t been appropriately stress-tested to handle such an increase.
Soo……should we eliminate the stress test in 2026?
A lot of people have been calling for it!
Maybe not the mortgage broker lobbyists, but there’s still time…
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4) Reduce CMHC insurance premiums.
You had me at “hello.”
If we really wanted to increase affordability for borrowers, we’d have to take a look at this, right?
Not only are high-ratio borrowers required to pay CMHC insurance on their loans, but the sliding scale percentages have been increased several times over the last two decades.
That brings back memories!
It was so cute; remember the time when the federal government had this idea that to “increase affordability” in the real estate market, they needed to make things more expensive?
I remember.
The connected dots went like this:
-Real estate is expensive
-Real estate prices are based on supply and demand
-There is more demand than supply
-Reducing demand would theoretically bring prices down
-Demand could be reduced by making it harder to buy
And thus, the federal government began a series of policy changes that made it more expensive for buyers, such as increasing down payment minimums and increasing CMHC premiums.
It’s so ironic!
The very people they were trying to help were the ones most affected!
Currently, high-ratio borrowers are required to pay a 4.00% premium on an LTV of 90.01% – 95%, and I can’t recall exactly what this figure was back in 2008, but it was a lot less!
Let’s imagine that a buyer of a $500,000 property is making a 5% down payment, or $25,000.
The CMHC premium on that purchase is a whopping $19,000. It’s almost as much as their down payment!
On a 30-year amortization, the buyer is paying “only” $52.78 per month as a CMHC premium. Chances are, they really won’t “feel” this premium, since their mortgage payment is in the neighbourhood of $2,200.
But if the borrower wants to sell the property at any point, they have to pay the entire CMHC premium.
That’s right.
If the borrower lived there for three years, that’s 36 payments of $52.78, or $1,900.08.
But they would still owe the CMHC $17,099.92, and that amount would be payable upon discharge of the mortgage.
If we really wanted to “make real estate more affordable,” couldn’t we reduce or eliminate CMHC insurance premiums?
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5) Lending buyers a down payment.
Did you ever notice how Hollywood makes the same movies, over and over? And yes, I’ve done this bit before…
The first big-budget, live-action Spiderman debuted in 2002 with Tobey Maguire, and many of us watched the second and third installments in 2004 and 2007.
That was it, right? Movies come in trilogies!
But then in 2012, we got The Amazing Spiderman with Andrew Garfield, and a sequel in 2014.
Huh? What? They just finished a trilogy!
But that’s not all!
Because in 2019, we were treated to yet another Spiderman trilogy, this time with Tom Holland, which offered us movies in 2019, 2021, and 2026.
Is there any originality left in Hollywood?
I believe that over a long enough time horizon, every awful piece of public policy that’s been offered or implemented will eventually be recycled. Even in situations where we saw a spectacular failure, we’re bound to see a similar piece of policy recommended or reintroduced at a later date.
In 2019, the federal Liberal government first introduced its idea for a “shared equity mortgage,” and the idea was absolutely lambasted by critics.
The theory was simple:
Take people who can’t qualify for mortgages and get them to qualify for mortgages.
What could possibly go wrong?
The “First Time Home Buyer Incentive,” or FTHBI, offered by the also-acronymed CMHC, was a terrible idea.
Not just because people wouldn’t flock to the program like the government expected them to, but also because the CMHC, which already insures mortgages on the backs of Canadian taxpayers, probably shouldn’t be in business with homebuyers – especially those on the bottom rung of the housing ladder.
The FTHBI was described as “voter candy” by many onlookers who realized that it was announced at the onset of a federal election, and in the end, very few people took advantage of it.
The government projected that 100,000 people would take advantage of the program in the first three years. In reality, only 15,925 approvals were issued.
Soooo……is it time for the federal government to start “helping” borrowers with down payments again?
The mortgage broker lobby wants the federal government to “establish a national down payment assistance framework.”
Sounds fancy!
Sounds like a fancy way of saying “direct taxpayer money toward down payments for people who do not have money for down payments.” And I really like how the CMBA adds, “developed in partnership with provincial governments,” but offers no explanation of what this is.
I used to think that only simple people believe that “the government” is just a large stone building in Ottawa that’s full of these cool money-printing machines, but it looks like some pretty sophisticated people believe this as well…
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Well, folks, those are my five ideas!
Have your pick.
If I had to choose one, I would be in favour of extending mortgage amortizations to 40 years. In fact, I’m in favour of that regardless.
Let’s do 40-year amortizations across the board. Both insured and uninsured mortgages, and both first-time buyers and borrowers who have owned before.
Why not?
The only downside comes from the “slippery slope” argument. Or, as I like to describe it, the “six-minute abs theory.”
Eight-minute abs was a brilliant marketing gimmick, but seven-minute abs came along and blew it out of the water.
And everybody knows you can’t exercise your abs in six minutes. Just ask Ben Stiller…
So what happens when we introduce 40-year amortizations? How long until people are clamouring for an extension to 50 years?
I loathe the other ideas, for what it’s worth. But that won’t stop people from suggesting them!
