December 18, 1957

CCF

George Hugh Castleden

Co-operative Commonwealth Federation (C.C.F.)

Mr. Caslleden:

The rate of interest is the same, though?

National Housing Act

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PC

Howard Charles Green (Minister of Defence Production; Minister of Public Works; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Green:

Yes. The rate of interest must be kept the same on all these loans. Otherwise you would have confusion.

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CCF

George Hugh Castleden

Co-operative Commonwealth Federation (C.C.F.)

Mr. Castleden:

For that reason the amendment is not of any value to the people who need assistance.

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CCF

Erhart Regier

Co-operative Commonwealth Federation (C.C.F.)

Mr. Regier:

May I ask the minister this question. Last night I referred to consideration of the value of our veterans housing legislation. The minister has informed us that some of his regulations are being changed. Has any consideration been given to amending the regulations in such a way that people would be able to build their own homes and take advantage of the provisions of the National Housing Act? I know that from a technical standpoint there is nothing in the way. However, I think the minister is well aware of the fact that most lending institutions, as soon as they find that the prospective home owner intends to build his own home, are no longer interested in accommodating him. The argument they use is that their experiences have not been good, that in so many cases it takes too long for the prospective home owner to complete the building, and they do not want to be bothered by that type of enterprise. Has the minister given any consideration to amending the regulations in respect thereto so that those wishing to build their own homes under the National Housing Act would be in as advantageous a position as are the veterans of today, many of whom are doing a remarkably excellent job and are obtaining a low cost home because much of the initial cost is their own labour.

Then I have another question to ask the minister. What is his estimate of the existing housing shortage at the present time? How many units does his department feel we are short? Also, what are the estimated needs for housing within the next ten year period, say, in Canada?

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PC

Howard Charles Green (Minister of Defence Production; Minister of Public Works; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Green:

Mr. Chairman, I do not pretend to be a prophet or the son of a prophet. I have no idea what the expectation is for the next ten years. In this house, as the hon. member knows, we live from day to day.

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LIB
PC

Howard Charles Green (Minister of Defence Production; Minister of Public Works; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Green:

When the agency loan plan was adopted the officials of Central Mortgage and Housing Corporation believed that the demand for the more expensive homes had already been met. In some areas they were a drug on the market. It was estimated that the increased demand this year for the more modest homes, such as are made possible by the agency loan arrangement, would be about

15,000 homes. We have already had 15,456

units covered by loans actually completed and there is not any indication that the demand has been met. Hence apparently there is still an effective demand for these lower cost homes.

The hon. member asked me earlier whether a change could not be made in order to give more consideration to an applicant who was building his own home. That is one of the questions that is being looked into, but there is some provision for consideration of that type at the present time. The lending value established for residential property includes the value of the land and the value of the structure built on the land. If the applicant owns the land on which the house is to be built, the value of this land is considered to be part of the applicant's equity. If the applicant is able to contribute owner labour by virtue of his own skills, the value of that owner labour is discussed with him and is included as part of his equity. For the home owner applicant, the applicant's equity may include the value of the property which he owns, the value of his own labour and some cash, provided that the sum of these three equals the difference between the amount of the mortgage and the cost of the finished house.

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CCF

Erhart Regier

Co-operative Commonwealth Federation (C.C.F.)

Mr. Regier:

I appreciate this reply. I am glad the minister said the matter is being looked into a little bit more. The minister will admit that if the lending institution is not interested in this type of applicant the regulation as to valuation means very little in effect. If the bank or the insurance company does not want to do business with an applicant who wants to do his own building there is not much use in saying you will assist his own efforts, if he is unable to obtain the mortgage.

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CCF

Alfred Claude Ellis

Co-operative Commonwealth Federation (C.C.F.)

Mr. Ellis:

I note that the minister pointed out that some 15,456 starts were made under the agency loan plan in this third quarter. In answer to a question asked the other day he pointed out that the agency loan plan was the answer to the frequent complaints that the cost of the average home was going up and getting further and further out of reach of the ordinary citizen. Would the minister care to comment on this matter and to state whether or not the department feel that the agency loan plan is the only way in which we can be guaranteed houses of lower cost and that otherwise the insured loan plan will go on producing homes of the value which he pointed out the other day.

I hope the minister can understand the point I am trying to make, that if the government is going to have to depend on the agency loan plan in order to provide low cost homes, then I suggest the $150 million of additional money

National Housing Act

passed over to Central Mortgage and Housing Corporation is not going to make very much impression on the housing needs of the low income groups.

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PC

Howard Charles Green (Minister of Defence Production; Minister of Public Works; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Green:

Well the agency loan plan was, of course, our main way of trying to meet the situation, but in addition to that we have been investigating every other possibility which would result in the building of cheaper homes and I think the success of the agency plan has convinced a great many builders and many of the lending institutions as well that this is a pretty good field into which they might enter. I am hoping the result will be that both the builders and the lending institutions will concentrate next year on these lower priced homes. There are indications that that is the trend at the present time.

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CCF

Alfred Claude Ellis

Co-operative Commonwealth Federation (C.C.F.)

Mr. Ellis:

Mr. Chairman, the minister last evening at page 2499 of Hansard pointed out that the lending institutions were not in a position to impose the type of restriction necessary to bring about a greater increase in low-cost homes. Now my question to the minister is this: is it not possible for the government to amend the legislation in order to provide that necessary authority? In other words, in the minister's own words, the situation as it now stands is that lending institutions who are engaged in insured loans apparently are not able to touch these lower priced homes, and that the only way in which these homes can be obtained is through the agency loan plan of the government.

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PC

Howard Charles Green (Minister of Defence Production; Minister of Public Works; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Green:

We will make every endeavour to get the lending institutions and the builders to stay in this lower cost home field. There is this feature about it, if the more expensive homes cannot be sold and if they are going to lie empty as they have done in some of the Canadian cities, then the higher price field becomes unattractive to the lending institutions and they are just that much more likely to put their money into loans on smaller homes. This is a problem which we will have to face if it arises and I am hoping that it will not be a problem in 1958.

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CCF

Alfred Claude Ellis

Co-operative Commonwealth Federation (C.C.F.)

Mr. Ellis:

One other matter. I know the

minister said last evening that he had given instructions that his officials would look into the question of lending values particularly in some of the cities where-as he pointed out- loan prices had sky-rocketed. I wonder if the minister could inform us whether this investigation is going to take place immediately and whether some decision is going to be made in the very near future. If something is not done then it simply means that persons wishing to build homes in certain cities are going to be required to pay, not merely the 10 per cent of the first $12,000 an additional

cost which will make the down payment in cash which they have to put forward completely out of line with the money they have available.

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PC

Howard Charles Green (Minister of Defence Production; Minister of Public Works; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Green:

Yes; the policy I announced last night is already being implemented.

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LIB

Herman Maxwell Batten

Liberal

Mr. Batten:

I would like at this time to bring to the attention of the minister a case in my own riding which came about during the past year and to ask him if he will give to the people concerned such assistance as he is able to give. About a year or so ago a company by the name of the Clouston Development Company, which is a home construction company, came into my home city of Corner Brook in Newfoundland purporting to be operating under Central Mortgage and Housing Corporation and entered into a deal with about 40 people to build homes. These people were supposed to deposit with the company certain amounts of money ranging from $3,000 to $5,000. At the end of the year, when there was no evidence of any construction beginning, people began to make enquiries and they found that although they had deposited with the company a considerable sum of money, the company had gone bankrupt and the 40 prospective home owners had lost their money.

I do not want to belabour the minister with all the details but might I give him just two or three particulars. One young married man, living in a small home not sufficiently large to accommodate his family, decided to mortgage his small home in order to purchase a bigger one under this plan. Another young man sold his home in order to get the amount of money necessary for the deposit and then found, after the company had gone bankrupt that he had actually lost his original home. Another older man-now 65 years of age and who will retire within a month or two if he has not already done so-took all his life savings to put into a new home. He in turn lost all his money.

Now this development company was, as I say, purporting to be operating through Central Mortgage and Housing Corporation and it is for that reason that I would ask the minister to look into the details of this case and to see if he could give any assistance to those people who have been involved in this most unfortunate incident.

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PC

Howard Charles Green (Minister of Defence Production; Minister of Public Works; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Green:

Mr. Chairman, if I remember correctly Central Mortgage and Housing Corporation was not in any way involved with this bankrupt company. We very much regret what has happened although the corporation is not responsible for it. We are

National Housing Act

trying to move in and give whatever help is possible to clean up this unfortunate situation.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. Knowles (Winnipeg North Centre):

have one question I would like to ask the minister, but before I do so I would like to make a very brief comment on an argument he used just before six o'clock. He said that to reduce the interest rate now would be unfair to those who have taken out mortgages at the present interest rate. I am sure that is an argument which the minister would just as soon not have on the record because that argument against the lowering of the interest rate could be applied to the lowering of the down payment which is to be the effect of the clause we are now discussing.

I am sure he does not take the position that it is unfair to those who had to put up a higher down payment that we should now be proposing to lower the down payment, and I am sure he does not take the position that for all time the interest rate on housing mortgages must either stay where it is or go up.

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PC

Howard Charles Green (Minister of Defence Production; Minister of Public Works; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Green:

I did not say that.

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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. Knowles (Winnipeg North Centre):

am glad to know that. In that connection may I ask the minister if there has been any change in the interest rate on long-term government bonds as defined in section 4, subsection 3 of the National Housing Act since the present rate of 6 per cent for loans under the act was established.

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PC

Howard Charles Green (Minister of Defence Production; Minister of Public Works; Leader of the Government in the House of Commons; Progressive Conservative Party House Leader)

Progressive Conservative

Mr. Green:

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December 18, 1957