Canada Mortgage and Housing Corporation (CMHC) released its first quarter financial results earlier this week, along with supplemental data on the organization’s mortgage loan insurance, securitization and covered bonds divisions.
CMHC’s mortgage loan insurance and securitization guarantee programs allow access to mortgage financing and contribute to the stability of the financial system. These programs are run on a commercial basis and are not supported by Canadian taxpayers. During Q1, CMHC generated $313 million in net income from these divisions.
“CMHC helps Canadian meet their housing needs,” said Brian Naish, CMHC chief financial officer, in a press release. “The first quarter of 2016 saw us provide mortgage loan insurances to 83,000 homebuyers across the country, deliver $589 million through our assisted housing programs and guarantee $21.8 billion in new securities. Each of these outcomes contributes to our vision of being the heart of a world-leading housing system.”
In addition, studies show that homebuyers with CMHC-insured mortgages are good at managing their debts as they have an average credit score of 747 for transactional homeowner loans and an average gross debt service ratio of 25.8 per cent for the quarter, which ended March 31.
The average insured loan amount for transactional homeowner mortgages was $238,632 this quarter. Total insurance-in-force was $520 billion at the end of the quarter, which is a $6 billion decline from the end of 2015. CMHC has a legislated insurance-in-force limit of $600 billion.
The strength of CMHC’s portfolio can be found by analyzing the overall arrears rate, which sat at 0.34 per cent as of March 31, 2016. Nationally, the firm’s arrears rate has been fairly stable, with small climbs in Alberta and Saskatchewan. CMHC’s presence across the country means it has a diverse national portfolio of insurance-in-force, which will cause regional arrears to not impact CMHC’s net income in the future.
Following the occurrence of wildfires in Fort McMurray, Alberta, CMHC provided lenders with a number of options to support insured homeowners that were affected by the disaster. Claim losses to CMHC are not expected to be significant as lenders and borrowers are working together to address repairs, recoup losses under existing property insurance policies and access financial assistance, such as emergency funds, as necessary.
CMHC is also working closely with provinces, territories and housing providers, including First Nations, to help provide low-income Canadians with affordable, better quality housing. In Q1 2016, CMHC provided over $589 million on behalf of the Government of Canada to housing programs.
