The decline of CMHC’s insurance in force has industry players speculating about the need for another player to enter the market.
“(It is) most definitely time for another corporation to enter this market; with CMHC cutbacks and strict guidelines elsewhere there are many quality clients going unserviced,” one MortgageBrokerNews.ca reader said. “With net incomes that high, and clearly not a lot of risk based on low debt service ratios, low loan to value, high credit scores and nearly 0 per cent foreclosure, this is a market that should be expanding, not contracting.”
CMHC have made a number of changes and cutbacks to its mortgage insurance offerings, to much speculation from brokers who wondered if the crown corporation would eventually leave the market entirely for private insurers.
“At the end of the second quarter of 2014, our total insurance-in-force was down $6 billion from December 31, 2013, standing at $551 billion,” CMHC stated in its quarterly release. “We expect insurance-in-force to decline to approximately $545 billion by year-end as mortgage repayments continue to offset new insurance written.
“As a result of lower portfolio insurance volumes, our total insured volumes ($) for the first six months of 2014 were approximately 13.3 per cent lower when compared to the same period in 2013.”
Earlier this year the crown corporation announced it would no longer insure the construction of condo developments or homes in excess of $1 million. Additionally, CMHC also announced it would no longer insure second homes and self-employed buyers who do not have third party income validation.
And brokers continue to speculate about a pending market share growth for both of Canada’s private insurers, Canada Guaranty and Genworth
. But is there room for more private players?
“Now the CMHC is having cap on the mortgage insurance amount (they will provide),” Kuldip S Panesar Homeland Mortgage Corp. said on MortgageBrokerNews.ca. “Other private insurance corporations … will get the more market share.
“New mortgage insurance corporations may also enter in the field.”