CMHC, the Crown corporation that’s responsible for controlling and facilitating most of the country’s mortgage insurance industry ceases to limit its exposure to the housing market crisis.
The Crown corporation reported that as of March 2016, the total insurance-in-force was estimated to be $520 billion which is a $6 billion dollar decrease compared to last year. The government has a limit of $600 billion, however, it now has a very strict policy regarding the amount of money being issued by banks as loans.
For those of you with a down payment of less than 20% and are loaning from a regulated bank, you must pay for pay for the mortgage default insurance as it protects you in case a consumer default occurs. The Canadian Mortgage and Housing Corp. is responsible for handling any deficit or paucity and the federal government fully supports them.
The Crown corporation said in a press release that “The strength of CMHC’s portfolio is reflected in the overall arrears rate which, as at March 31, 2016, stood at 0.34 per cent. Nationally, CMHC’s arrears rate has remained relatively stable; although there has been a small increase in arrears in Alberta and Saskatchewan,”. They went further to emphasize on impending risks and said that the net income should not be affected by the regional arrears in a material way.
On average, the loan amount insured for any transactional homeowner mortgages in the quarter was estimated to be up to $238,632 with a credit score averaging 747, as reported by CHMC. These numbers prove that home buyers have a “strong ability” to settle their debts. As of march 2016, the average gross debt service ratio to house hold income was up to 25.8% for the first quarter.
The Crown cooperation has been affected by Wildfires in Fort McMurray, Alta., an organization which has granted loans to support CMHC. However, CMHC reported that the losses are not so huge after all.