Move comes amid concerns real-estate market is overheating.
Canada’s government-owned housing agency 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 Monday in its annual report it plans to have $545 billion in so-called mortgage insurance in force this year as repayments offset new policies. CMHC which insures home owners against default, said its insurance in force as of Dec. 31 fell 1.6 per cent from the year earlier to $557 billion.
The agency said it plans to insure 353,975 mortgage loans this year, up 3.0 per cent 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 $120 billion in mortgage-backed securities and Canada Mortgage Bonds this year, down 2.1 per cent from $122.6 billion in 2013, it said Monday. The agency will probably issue close to $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 said Monday.
CMHC insurance is fully backed by federal government. By law, Canadian mortgage that have less than a 20-per cent down payment must be insured.
Edmonton Journal, Business, Section C, Editor: Mark Iype, Tuesday May 6, 2014
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