CMHC's requiem for refis?

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Refis through CMHC seem increasingly a thing of the past, with Q1 results pointing to an almost-70 per cent drop – a year-over-year decline dwarfing any dip in new mortgage volumes.

More specifically, insurance volumes covering those new originations fell about 23 per cent in the quarter compare to the year-ago period. That’s relative stability, say some brokers more concerned about the 69 per cent plummet in refinance volumes at the Crown corporation.

Those mortgage professionals are also concerned about what the declines means for their bottom lines and, more importantly, those of their most vulnerable clients.

“The government has been moving away from refinances even before the rule changes in July,” said Sarah Liles, a veteran of the industry. “And now with those changes the clients that really need refinances for debt consolidation have to lose their homes or look for private funds that could ultimately sink them.”

Last July’s move to lower the LTV for insured refis to 80 per cent effectively blocked many homeowners from accessing equity in their homes.

The decision has been lambasted by many brokers as they’ve seen that end of their business shrivel up.

Still, there have been lesser-known consequences.

“The result of this is that a client with a high ratio collateral mortgage will not be able to move their mortgage to another lender upon maturity,” High-volume broker Jim Tourloukis told early this month. “That’s to the extent the home’s value keeps the mortgage high ratio.”

But the fall in refi activity may continue, with brokers fearing the government is ushering CMHC out of that segment altogether.


The decline in business for CMHC falls in line with Jim Flaherty’s desire to curb household debt levels and end, what many call, homeowner abuse of refis.

  • Annette on 2013-05-31 9:31:43 AM

    The question is: Are we seeing the phase out of CMHC? There is no question that the Govt is very concerned about their/our exposure with the CMHC insured mortgages in the event of a market collapse. Especially with Lenders insuring even the conventional mortgages. These moves are as much about covering their own bottom line as they are about the consumer.

  • John Panagakos on 2013-05-31 11:41:30 AM

    My Last letter to Jim Flaherty and his response was to my request to bring back the 90% refi was. " we are not insuring consumer debt , consumer debt is not the mandate of CMHC. So its now better off to sell your home that has built up equity pay off your debts! at a cost of realtors fees and land transfer tax and buy the similar house back next door with 5% down. Recently one of my high profile clients was forced to do that since he could not refinance his debt at 90% . What gives this does not make scene. Give me a break Jim Flaherty!

  • Vic Lehan, Mortgage Architects on 2013-06-01 10:39:30 PM

    At 85% LTV refi's died as far as I could see in my area. At 80% LTV that was a kick to see if there was still some life.

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