The head of the Canada Mortgage and Housing Corporation wrote officials across the country to criticize a 2016 British Columbia program that gives interest-free loans to first-time home buyers.
Evan Siddall, president and CEO of the CMHC, was scathing. “Programs that support demand in supply constrained markets, like Vancouver, serve primarily to increase prices and make the affordability problem worse,” he said.
Siddall was responding to an email that Gregory Steves, the assistant deputy minister in the housing and construction standards office in B.C.’s natural gas development ministry, had sent to some 60 officials in Canada’s provincial and territorial governments outlining the new program.
“Greg’s email necessitates a reply from me lest anyone think my silence signalled tacit support,” Siddall wrote in his Dec. 17, 2016, email to the group.
Siddall said the Bank of Canada continued to warn that high household debt was the top threat to the country’s financial stability. “We encourage all aspiring homebuyers to make informed and responsible home-buying decisions that don’t put their financial futures at risk, especially in a market that is showing signs of overvaluation,” he wrote.
The email was among 1,618 pages that The Tyee received in the second phase of a response to a request made in December for records under B.C.’s Freedom of Information and Protection of Privacy Act. The government did not release the records until May 11, two days after the provincial election.
The released records were heavily censored under various sections of the act, including those allowing public bodies to withhold cabinet confidences, policy advice, legal advice, information harmful to law enforcement, information harmful to intergovernmental relations and information harmful to the financial or economic interests of a public body.
Siddall was even more pointed in his criticism in a message to Steves on Dec. 19. “You will know we are holding our noses firmly on this and I would not want any other [provinces and territories] to be misled into thinking this ill-advised program represents good public policy.”
He said the B.C. government’s claim that the program would make home ownership more affordable for thousands of British Columbians was wrong. “I am joined by a loud chorus of economists in insisting that it will do the exact opposite,” he wrote.
Steves forwarded the message to Shayne Ramsay, the CEO of BC Housing, with a note saying, “Feeling the love.”
Ramsay responded, “I am going to say something... this is way over the top.”
In an earlier message to Siddall, Steves had acknowledged, “We don’t always get to set the direction. We do try to make the best of what we are given.”
Premier Christy Clark and Housing Minister Rich Coleman announced the program on Dec. 15. The government will loan first-time homebuyers up to $37,500, with no interest or payments required for five years, to help them afford a downpayment on homes worth up to $750,000. The program began accepting applications on Jan. 16.
The FOI documents show officials from both the finance and community, sport and cultural development ministries were involved in designing the program, though neither participated in the announcement.
B.C. government officials were aware of the federal government’s opposition to the direction the province was taking, the records show.
“In late November, the Federal Government advised BC Housing that it will be implementing regulatory changes that seek to reduce their mortgage insurance risk, cool housing price escalation, and counteract first time buyer assistance programs under consideration or recently announced in at least two provinces,” Trudy Rotgans, the executive director of the housing policy branch wrote to Dave Nikolejsin, the deputy minister of natural gas development, in a Nov. 28 email.
An email from around that time written by Doug Page in the housing policy branch referred to “negotiations” with CMHC.
In handwritten notes dated Nov. 7, Page said, “CMHC can't stop the program but can change rules, fees, etc.”
A document labelled “background” and dated Nov. 22 made note of Siddall’s public comments saying the federal government might need to require higher down payments to counteract low interest rates and provincial programs aimed at helping first time buyers.
There was interest in the B.C. program from at least one other Canadian jurisdiction. Mary Cameron, the vice-president of corporate services for the Yukon Housing Corporation, wrote to Steves on Dec. 16 saying she and her colleagues were “thrilled” about the B.C. launch and asking for help.
“We have a similar program, that upon first blush has the same major components of your program,” she wrote. “Our program after two-and-a-half years of delivery has recently had to come offline due to CMHC not approving it and by extension the lenders being unable to partner with us.”
She said they were working with CMHC to get the program re-approved and would appreciate talking with B.C. officials about what they did to get their program approved.
Steves wrote to Cameron, “We had to make a number of major changes to be compliant with CMHC’s new rules. I believe the key one was allowing the second mortgage to run the entire amortization period of the first loan.”
The documents also included research on housing affordability programs in various jurisdictions, including a similar loan program started in the United Kingdom in April 2013. That program had different goals than those publicly stated for the B.C. program. “This scheme is seen by central [U.K.] government as much as an economic stimulus to the home building industry as an affordable home ownership scheme,” the document said.
Between July and December the B.C.-planned program had at least four different names with officials settling on the Home Owner Mortgage and Equity Partnership just three days before it was publicly announced.