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March 28, 2021

CMHC insurance approaches important ceiling

Canada Mortgage and Housing Corp. expects to be issuing substantially less increase mortgage insurance over the next few years.

The change comes because the federal government has set $600 billion as the upper limit for the amount of mortgage insurance CMHC can have on its books.

CMHC’s insurance portfolio has soared by hundreds of billions of dollars in recent years, and is expected to be well beyond $500-billion in 2012.

What difference does it make to you? Well, Canadian taxpayers are ultimately on the hook for this insurance, which is used to reimburse banks when borrowers default on their mortgages.

Both the International Monetary Fund and the C.D. Howe Institute worry that CMHC has already taken on too much mortgage liability, exposing said taxpayers to undue risk.

More importantly, in the short term it will mean a sharp drop off in insuring rental and self-employed stated income mortgages, according to Canadian Mortgage Trends.  

“The government is clearly encouraging CMHC to taper back its volumes, as lofty home prices and debt levels stoke concern about mortgage default risk,” CMT predicts.

Will this make a difference to you when mortgage shopping?

By Gordon Powers, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...