Street Capital has added Genworth as a mortgage default insurer, a move, says the lender, in response to broker requests.
“We had a high demand to add Genworth as an insurer from our brokers, so we are very excited about working with Genworth,” Paul Grewal, Street Capital president, said Wednesday. “We wanted to provide our broker supporters with more product choice and tools to help them meet their borrowers’ financing needs and grow their business.”
Genworth policies will now be available for broker deals under under the Loyalty and Street programs, whether brokers are opting for the upfront-commission model or trailer fees.
Street Capital is one of the few broker channel lenders now offering all three mortgage insurers, Canada Guaranty included.
Grewal's announcement comes on the heels of the release of CMHC financials suggesting the insurer is grappling with decreased demand for its products, even as originations slow and competition grows.
While the Canada Mortgage and Housing Corp insured 643,991 homes last year, it was a staggering 187,091 fewer than it had expected. The gap reflects a drop in demand for its product but also for default insurance, in general.
While all high-ratio mortgages must carry that insurance – from either CMHC, Genworth or Canada Guaranty – overall demand fell in 2010 as residential construction and the sale of existing homes dropped off after the introduction of tougher qualifying terms, pegged to the five-year benchmark rate.
Still, CMHC managed a profit, providing $106.1 billion in insurance last year. It’s about $17 billion below the $123 billion it had budgeted for.
Lenders and brokers are suggesting that the gap isn’t just about new qualifying terms but increased competition in the marketplace.
For its first quarter this year, Genworth Canada wrote $101 million in net premiums, a 7 per cent increase over the same period last year. The deal with Street is expected to bump up that performance.
Still, CMHC’s other competitor is also making up ground, last month announcing a deal with BMO.
“We are delighted to have the opportunity to work with the BMO Bank of Montreal team and to demonstrate the advantages of increased competition by offering improved choice among mortgage default insurance providers,” Charles said, in announcing the partnership.