While brokers doubt the ability of Canada’s independent mortgage insurers to pick up the slack if the government downsizes CMHC’s mandate, they’re much more certain about the kind of effect that move would have on their business.
“I don’t see Canada Guaranty or Genworth doing anything outside the box; whether or not they want to talk a leadership role would be a question to ask them but I don’t think they have it in them,” Ian Mackay of Verico Red Path Financial told MortgageBrokerNews.ca. “If they were to all of a sudden take on a role that is much bigger than the one they have now, I don’t know if they’d be willing to do so.”
Finance Minister Jim Flaherty may not be on the same page. He recently stated that Canada’s leading mortgage insurer has grown beyond its original intention, which was to help aid in the post-war boom following the Second World War.
“Regrettably, CMHC became something rather more grand, I think, than it was intended to be,” Flaherty told reporters. “We’ll see over time what that role should be.”
Regulators have implemented a number of restrictions and tweaks to CMHC lending – most recently by imposing a 3.25 per risk fee on all policies written starting in 2014.
Brokers feel that further CMHC restrictions may have a detrimental effect on the housing industry.
“I think we’re getting to a point where additional measures will freeze things up,” Mackay said, suggesting any decision to put further restrictions on insurance could “have a negative effect on people who want to get a mortgage.
“The measures that have been taken have been sufficient and I understand that we want to be fiscally responsible, but if you talk to any broker or lender it’s difficult to get deals done.”