Government to reduce exposure to housing market; but doesn’t know how

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Reducing the federal government’s exposure to risk from the housing market is a long term aim of finance minister Joe Oliver, but so far there’s no plan to do it. Concerns have been raised by organisations such as the International Monetary Fund which believes that exposure to the market, especially through the CMHC, is a risk to the government and wants Ottawa to pass more responsibility onto the private sector. Speaking to the media yesterday Mr Oliver stated that there is not going to be any change in the short term.
  • Dustan Woodhouse on 2014-11-28 9:13:51 AM

    Were CMHC to privatize I would be first in line to buy shares, I would happily take ownerhip of the entire company.

    Perhaps those with concerns around CMHC should consider a few CMHC numbers.

    2009 peak arrears rate 0.47%, since trending down to 0.35%

    55% average Loan to Value. (pretty close to zero exposure)

    75% of Mortgages insured below 80% LTV

    7% of Mortgages insured above 90% LTV

    2% of Mortgages insured above 95% LTV

    Average Credit Score of a CMHC insured mortgage holder is 726 (Excellent).

    74% have scores above 700
    15% 660-700
    9% 600-660
    1% have scores below 600

    $17,000,0000,000 (Billion) in cash reserves

    (This 17B$ is seperate from the $15B+ that has been shifted from CMHC's books into the Feds coffers)

    Arguably a very low-risk situation.

    Sounds like Mr. Oliver got the memo that CMHC is in fact a Profit-Centre and that the Fed and by extension taxpayers benefit greatly.

  • Grazor on 2014-11-28 9:22:59 AM

    Most of our economists in Canada including CMHC believes that while we have a growing housing market, they are not of the opinion that there is a bubble. I have heard some very salient arguments to support this, the primary one being on household formation and more specifically our immigration policies supporting said growth. There has been acknowledgement that some areas may be overvalued. Nonetheless it would be interesting to see what research the IMF has, that's makes it believe its in a better position to judge our housing market than our own guys on the ground. Do remember, the IMF has a long and storied history of failure in almost anything it has touched globally. Please have them stay away and keep their opinions to themselves.

  • Deb on 2014-11-28 9:46:41 AM

    This heading to this article is misleading, it says nothing, and has spelling errors. Try actually having a story and proof reading it before pumping it out.

  • Mary on 2014-11-28 10:03:16 AM

    IMF leave us alone! Go live in your own Utopia!

  • Grazor on 2014-11-28 11:25:57 AM

    @Mary yes I know; but on e can only hope.

    @ Dunstan, its so rare to see the part of the story you highlighted in terms of how much revenue is generated and the benefits associated and the reasonable low level of risk.

  • Mary on 2014-11-28 3:27:08 PM

    It's interesting to watch this real estate circus - a struggle between 'the good and the evil". Have you considered that lies and unsubstantiated claims sure ignite itch of real estate ownership no matter the costs and are definitely cheaper than economic stimulus.

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