Brokers may not want to hear it but tighter mortgage lending rules have attributed to a decline in defaults; while CMHC profits climbed according to a press release by the organization published at the end of August.
“For the six months ended June 30, 2013, CMHC’s net income (after taxes) was $824 million, an increase of 6% ($49 million) when compared to the same period in 2012,” the agency said in a release. “This increase was mainly attributable to lower net claims.”
As for losses, claims were down year-over-year; indication, according to CMHC, that the tightened lending rules are having a positive effect.
“Losses on Claims in the second quarter were $117 million, $51 million (30%) lower than the same quarter in 2012 and $72 million (22%) lower on a year-to-date basis,” CMHC said. “The lower losses are the result of declining claim volumes (15% lower than those received during the first six months of 2012).”
For their part, those with mortgages currently backed by CMHC insurance report high credit scores.
“The average credit score in CMHC’s high-ratio insured homeowner portfolio is 727,” CMHC said. “The high average credit score demonstrates a strong ability among homebuyers with CMHC-insured mortgages to manage their debts.”
CMHC also boasted about the amount of money it has generated for the Canadian economy over the past ten years.
“Over the last decade, CMHC has contributed more than $17 billion towards improving the Government of Canada’s fiscal position through both its income taxes and net income,” they said. “Of the $17 billion, CMHC’s insurance business has contributed more than $15 billion.”