The budget announcement quietly slipped in changes to government-backed mortgage insurance, including reductions to the amount of new guarantees CMHC will provide.
“The Government continues to adjust the housing finance framework to restrain the growth of taxpayer-backed mortgage insurance and securitization,” the budget report states. “These measures will support the stability of the housing sector and the financial system by increasing market discipline in mortgage lending.
“They will also reduce taxpayer exposure to the housing sector without compromising the availability of reasonably priced mortgages.”
This should come as no surprise to a number of brokers, with Finance Minister Flaherty recently stating CMHC has evolved past its initial intention.
“Regrettably, CMHC became something rather more grand, I think, than it was intended to be,” Flaherty told reporters in December. “We’ll see over time what that role should be.”
Of course, the federal government has adjusted the rules for CMHC mortgage insurance four times in the past five years, including establishing a maximum amortization period of 25 years for mortgages with down payments less than 20 per cent.
However, Tuesday’s budget also announced a number of further changes to the Canadian Mortgage and Housing Corporation, which includes reducing the amount of new guarantees CMHC is authorized to provide.
Read on for the full list of changes.