Brokers have called for CMHC to lessen its influence in the Canadian mortgage market but one industry player believes it is setting a dangerous precedent.
“When I hear about CMHC decreasing it’s never good news – it has a negative impact as a whole,” Morris Briglio of Verico
The Mortgage Advantage told MortgageBrokerNews.ca. “The private insurers will step up (for a time) but then they will decrease as well; they always seem to follow the lead.”
CMHC announced Thursday that it is now insuring 50 per cent of new mortgages – a record low for the Crown Corporation. It has also vowed to keep its share at that level.
“CMHC has a legislated limit of $600 billion of insurance-in-force. During the first quarter, total insurance-in-force decreased by $4 billion to $539 billion,” wrote in an official release Friday. “CMHC expects insurance-in-force to decline gradually as normal mortgage repayments continue to offset new insurance written.”
For three straight years, CMHC’s total assets and liabilities have fallen.
“I’m very proud of what we accomplished in 2014,” Evan Siddall, president and chief executive officer of CMHC said in a release in early May. “Beginning with a new mission, to help Canadians meet their housing needs, we took steps in all our areas of business to ensure our operations are aligned with CMHC’s refocused approach, and to be a high-performing organization to provide the most value to Canadians.”
CMHC’s net income rose to $2.6 billion in 2014 (up from $1.8 billion in 2013), while its total insurance in force fell $14 billion to $543 billion this past year.
The Crown Corporation has taken steps to minimize its influence on the economy and housing markets, which is evidenced by the shrinking number of assets, which totaled $248 billion in 2014 – down from $270 billion in 2013.
However, despite broker worries, the private insurers have committed to growth.
“Canada Guaranty has experienced significant growth over the last several years by increasing our customer base and deepening current lender relationships,” Mary Putnam, spokeswoman from Canada Guaranty said in an e-mail statement to BNN. “We are well positioned for increased market share.”
MI CEO Stuart Levings recently said it “will continue to fight for market share in a responsible prudent, manner,” according to BNN.