A closer look at Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation have provided some further insight into their business operations. The following insightful information is based on CMHC’s corporate plan, how they operate, who they insure, some Canadian home value statistics and who’s paying their mortgages.

General market Data:

-CMHC forecasts that it will insure 706,664 mortgages this year, down 15% from it’s expected volumes in 2010 and down 33% from 2009.

-Large multi-unit properties and rural/smaller markets comprise almost 40% of CMHC’s high-ratio insurance business.

Arrears:

-Arrears rates, or consumers that have fallen behind, are in-line with industry trends and as employment figures improve CMHC expects its already low arrears to moderate throughout 2011.

Amortization and Terms:

-The average amortization period for all CMHC insured homeowner loans at initiation is 24 years. The average amortization period for CMHC insured rental mortgages is 25 years.

-The ratio of mortgages with terms over three years is 82%.

Credit Quality:

-Average credit score of CMHC-insured borrowers in 2009: 718 (range is 300-900)

-Only 5% of CMHC insured borrowers have no credit score (need 15% equity to get into this program) or have a score less than 600.

-Almost 70% have scores over 700.

-Twenty-five per cent have scores from 600-699.

Value and Equity:

-Only 10% of CMHC insured properties have a value over $400,000.

-The average CMHC insured homeowner has a balance of $151,630.

-Eighty-seven per cent of CMHC insured mortgages have more than 10% equity in their home.

-Average equity of a CMHC-insured borrower is 46%.

Other:

-Fifty per cent of CMHC-insured high-ratio borrowers accelerate their mortgage payments.

-CMHC plans to guarantee $20 billion National Housing Act Mortgage Backed Securities in 2011 and $32 billion in Canada Mortgage bonds.

All in all, CMHC is Canada’s largest mortgage insurer, while they do have two other competitors, Genworth and Canada Guaranty, they do insure more than 65% of the Canadian home mortgage market. In general, if you have less than 20% down payment or equity, than you will require some form of mortgage insurance as long as you meet the guidelines.

Jean-Guy Turcotte is an Accredited Mortgage Professional with Dominion Lending Centres-Regional Mortgage Group and can be contacted for appointments at 403-343-1125or emailed to jturcotte@regionalmortgage.ca.

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