CMHC Says It Will Trim Canada Mortgage Insurance in ForceAndrew Mayeda and Greg Quinn
Canada’s government-owned housing agency said it is reducing the amount of mortgage insurance it has outstanding amid concern the nation’s real-estate market may be overheating.
Canada Mortgage & Housing Corp. said today in its annual report it plans to have C$545 billion ($497 billion) so-called mortgage insurance in force this year as repayments offset new policies. CMHC, which insures homeowners against default, said its insurance in force as of Dec. 31 fell 1.6 percent from a year earlier to C$557 billion.
The agency said it plans to insure 353,975 mortgage loans this year, up 3.0 percent from last year.
Prime Minister Stephen Harper’s government has been reining in CMHC’s share of the mortgage-insurance market to curb taxpayer liabilities in the event of a downturn. In 2012, the government gave the country’s banking regulator new powers to oversee CMHC. Finance Minister Joe Oliver pledged in March to continue lowering potential risks to taxpayers.
CMHC also guarantees mortgage-backed securities used by financial institutions to raise funding for housing loans, as well as the debt it issues, known as Canada Mortgage Bonds. CMHC will back C$120.0 billion in mortgage-backed securities and Canada Mortgage Bonds this year, down 2.1 percent from C$122.6 billion in 2013, it said today.
The agency will probably issue close to C$40 billion in Canada Mortgage Bonds this year, in line with issuance over the “last few years,” senior vice president of capital markets Wojciech Zielonka told reporters on a conference call today.
CMHC insurance is fully backed by the federal government. By law, Canadian mortgages that have less than a 20 percent downpayment must be insured.