In a proposed move that will ostensibly help consumers cope with the long-running home affordability issues in Canada’s hottest markets, Tory leadership candidate Michael Chong called for the privatization of the CMHC
In a report by the Financial Post
, Chong argued that such a move would rein in the unchecked growth of government-backed mortgage credit, and thus address the roots of the country’s enormous household debt burden. He added that government-backed insurance isn’t a requirement for Canadian real estate to continue operating properly.
The Ontario MP stated that should he get the leadership position, transferring the CMHC’s mortgage insurance and securitization functions to the private sector would be one of the aims of the Conservative Party’s government.
“Getting the government out of the business of providing mortgage insurance and securitization will ensure more sustainable mortgage credit growth rates and make housing more affordable for Canadian families,” Chong said.
“Privatizing CMHC is the single most important long-term thing government can do to ensure that Canadian families can continue to afford to buy a home.”
Chong added that the Office of the Superintendent of Financial Institutions (OSFI) will be given more teeth to prevent Canadian banks from assuming unmanageable levels of risk. Furthermore, the Conservatives would work to reduce the risks on Canadian taxpayers, as well as free up financing to better serve the needs of small- and medium-sized enterprises.
CMHC president and CEO Evan Siddall recently said that the new federal mortgage rules, which took effect on October 17, would reliably address the long-running issue of overheated real estate markets without sacrificing Canada’s economic growth.
“Affordability pressures hurt lower-income households the most and cause real socioeconomic consequences,” Siddall stated. “Action was needed. The level of household indebtedness in Canada is now at a historic high of 168 per cent of disposable income. The Bank of Canada calls this factor the greatest vulnerability to our economy.”
Latest regulatory changes will support the Canadian economy—CMHC head
CMHC: Foreign wealth just one of many drivers of Vancouver prices