“Over time, I don’t think it’s essential that a government financial institution provide mortgage insurance in Canada. I think what’s key is that mortgage insurance is available at a reasonable cost in Canada. I think there is a role to regulate but whether we, the Canadian people, have to be the owners and shareholders of a financial institution to do this is a question. I don’t think it’s essential in the long run.”
"As of Q3 2011, CMHC had $17.4 billion in capital set safely aside to cover claims. In a doomsday scenario, CMHC sources have assured us that it could handle obscene prime default rates on the order of 3.00% or more."
But there's one small problem. When mortgage rates averaged 17.89% in 1983, the average mortgage was around $40,000 - $50,000. And the most recent average homes selling in the market were going for around $100,000 (and none of them for only 5% down or an amortization more than 25 years)
And they simply won't be able to renew their mortgages under an OFSI strictly enforced LTV ratio requirement.
If this were to come to pass, a default rate of only 3.00% would be a godsend.
Click 'comments' below to contribute to this post.