In a recent statement, Canada’s national housing agency said that new regulations introduced last fall has decreased the size of the country’s insured mortgage market by about 33 per cent year-over-year in the second quarter.
The Canada Mortgage and Housing Corp. (CMHC) announced in its latest financial report that it provided mortgage loan insurance to 78,607 units in the three-month period ended June 30, a sharp drop from the 117,463 units during the same period a year ago.
As quoted by The Canadian Press, CMHC said that volumes decreased largely as a result of the new rules announced by the federal government in the fourth quarter of 2016.
The federal government now requires all home buyers with less than a 20 per cent down payment to undergo a stress test to ensure the borrower can still service their loan should interest rates rise, or their personal finances fall.
However, while the current regulatory regime has cut into the purchasing power of some first-time homebuyers, CMHC also said that it has observed an improvement in the quality of its mortgage loan insurance portfolio.
The agency noted that its overall arrears rate was 0.29 per cent in the second quarter, down from 0.32 per cent in the first quarter.
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