You may have seen by now that the …
CMHC (is) backing fewer loans
The Financial Post reports:
Canada Mortgage and Housing Corp. is cutting back on mortgages it insures as the Crown corporation edges closer to a $600-billion cap imposed on it by the federal government
The FP article goes on to say:
A CMHC spokesman confirmed that it had approached a number of lenders at the end of 2011 about reducing its “bulk or portfolio insurance” after third-quarter results showed the agency had committed to back $541-billion in mortgages. CMHC, which guarantees mortgages held by financial institutions, is ultimately backed by the federal government and needs approval to go over the $600-billion limit — something that would create greater risk for taxpayers should the housing market collapse.
CanadianMortgageTrends.com says “our sense is that the news is not great (at least in the short-to-medium term) for mortgage consumers, smaller lenders and brokers. On the other hand, it may be healthy long-term for the housing market.”
CMT.com also suggests:
Note: Nothing is changing with high-ratio insured mortgages. So if you’re getting a mortgage with less than 20%, this news probably won’t impact you (for a while at least).
“We watch the housing market carefully and we are prepared to intervene if necessary. Having said that, we’re not about to intervene in the housing market now,” said Finance Minister Mr. Flaherty this month. For his part, Bank of Canada Governor Mr. Carney said “we see that in a number of real estate markets in Canada, valuations are at a minimum, firm; in others, they’re probably overvalued. So there are risks there.”
Sources have indicated the government is already considering tough new measures for calculating how the self-employed qualify for loans and tightening regulations for condominium buyers, so there is probably little appetite for backstopping even more debt from CMHC. In addition to CMHC, the government has a $300-billion limit for private mortgage default insurers.
CMT ends with “Looking forward, CMHC’s cutback on bulk insurance has numerous potential repercussions. No one has the answers yet because we’re still waiting to see how things shake out.”
To discuss this, or any other mortgage and financial situations that may be concerning you, please don’t hesitate to get in touch with me and I’ll help walk you through this in a way that makes sense to you and your family.