CMHC takes responsibility for all mortgages?

Apparently it’s not just the typical less than 20% down mortgage that the CMHC insures. They’re currently almost at their government mandated limit of $600 billion in default insurance because banks are buying up insurance to cover even low ratio loans (ie greater than 20% equity). This removes all risk from the lender, so why wouldn’t they do it? I didn’t even know this was permitted.

Normally, every 3-5 years as the mortgage market grows, CMHC has asked for, and received, approval from parliament to raise this limit. It was last raised by $150 billion in 2008.

Now media frenzy has politicians scurrying to offload mortgage risk from the government back to the private sector. (The government guarantees CMHC’s liabilities, so public concern is certainly understandable.)

As a result, many question whether CMHC will get its $600 billion limit raised anytime soon.

Here’s some reaction on that:

TD Bank economist Sonya Gulati tells CBC that not increasing the limit “may serve to tighten the housing market.”
RBC economist Robert Hogue told Global News that increasing the limit “…would be, policywise, a very delicate balance to strike.”
The Post quoted an unnamed industry source as saying: “…What will the government do, not increase (CMHC’s) limit? This could kill the entire housing market.”

Read the full article here.

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peter

my original comment was for the above. Just wondering on source of info is all.

thanks

peter

@GVREB:

where is this info from? The numbers and write up are very different from the real esate board of vancouver post. I personally agree with the above but am curious.

cheers

Devore

@DEFAULT NAME: Well, I challenge you to show an example of where he's recommending buying bank shares. When it comes to banks, he's all about the preferred shares, which will do just fine.

Fixiee Guy

Garth Turner is da bomb man! That guy is like a genius…like Einstein or Rain Man…Big hero of mine. I'm not gay but I'd fool around with Garth if ya know what I mean!

Anonymous

@patriotz: "The taxpayers have a least an order of magnitude more exposure than all the lenders put together, so the laugh is on us unfortunately."

So compound it by buying shares directly in the lender?

Kind of like saying may as well smoke because I am exposed to other cancer causing agents anyway.

patriotz

@DEFAULT NAME:

The taxpayers have a least an order of magnitude more exposure than all the lenders put together, so the laugh is on us unfortunately.

Anonymous

@Anonymous: Re Garths latest…

From Garth's blog referring to Vancouver's imminent collapse: "Just imagine the exposure major lenders have in that city."

Imagine if you are an investor in those lenders as you have recommended people do with their money. Too funny.

Devore

@DEFAULT NAME:

and calls the Bank of Montreal’s recent description of the Canadian housing market as a balloon that will deflate rather than a bubble that will pop, “semantics.”

Them's fightin words!

VMD

@ZRH2YVR:

Oops, missed your initial prediction post earlier today.

Thanks for the entry!

(I assume "VRI = Van West & Richmond)
http://s14.postimage.org/s69431jq9/VCI_Contest.jp

40 minutes left!

Anonymous

http://www.canada.com/business/Under+used+labour+… A couple of very interesting comments in the link posted previously by Jumping in. FirstLine (CIBC) is one of the biggest lenders and they are now not lending to 13% of the Canadian workforce (self employed) and will not give out more than $1 million. Imagine trying to buy a house in Vancouver and being capped at $1 million for a mortgage and having to prove income to support it? Good luck. If others follow suite this alone will be devastating to the housing market. CIBC has typically been the riskiest lender out there. My bet is all banks will do the same otherwise be viewed as taking too much risk which could hurt the stock prices. "FirstLine, CIBC’s wholesale mortgage arm, quietly announced Tuesday that it will no longer accept applications from homebuyers who can’t prove they have… Read more »

Weiner

Damn..$200,000 house in Kits with 8% interest is like $1700.00 a month! What kind of crash is this?! Ya still gotta be one of them 1%!

ZRH2YVR

– I thought I posted earlier. However, here's my info.

I suppose the HPI forecast I would say is REBGV wide,

June HPI – a decrease of 3.7%

December HPI a decrease of 11.4%

June SFH – Decrease 4.7%

Dec SFH – Decrease 15.5%

Jun VRI SFH – Decrease 5.5%

Dec VRI SFH – Decrease 18%

Jun BBY SFH – Decrease 2.5%

Dec BBY SFH – Deccrease 7.5%

Wow – Richmond down 18% could be interesting.

Nero

@jesse:

Doesn't concern me either way. This trend is irreversible and while we all want prices to plunge quickly, given how low rates are, we may see a slow attrition and deterioration for well over a year before the real panic sets in.

One thing is for certain, the uptrend is finished.

VMD

2012 VCI Price Prediction Contest entry ends in just over an hour!

Adding in the 4 "non-hardcore" HPI-only predictions submitted today, we have the 9 contestants.

The 9 contestants' predictions for HPI Averages at:

Jun 30, 2012: -2.3% (Most bullish: Jesse @ +2.9%; Most bearish: BC Reader @ -6%)

Dec 31, 2012: -8.8% (Most bullish: The Ant @ -2.8%; Most bearish: Guy Smiley @ -14.6%)

Last-minute entries welcome!

http://s7.postimage.org/cxxipa063/VCI.jpg

jesse

@Nero: I don't know much about it but I would expect that listings take priority over sales. Look it's one day, it's plausible that they had to stop short today for other reasons. I just don't want y'all to be disappointed again, it makes me 🙁

VMD

@jesse:

as in human error? But it didn't happen last Feb 1st..

Plus today is mid-week, not even a Monday or Friday…

We'll see tomorrow… maybe the sales-entry monkey did get sick today (but the listings-entry monkey didn't) ; )

Nero

Didn't seem to have a problem entering listings.

jesse

@Tony: I think it's just a matter of sales not being entered. I expect a big sales day tomorrow. But hey you never know!

Anonymous

@lol cats: I rent a kick-ass condo in Yaletown at 60% cost of owning and I put $6K per month into savings…sure, sign me up for another 5-10 yrs!

Anonymous

Check out Garth's latest post.

Stick a fork in Vancouver, because it is done.

Weiner

Hey guys vote me up will ya…friggin realtors are voting me down.All them realtors are gonna be down at the soup kitchen! Ha Ha.Hey when's the Crash party?…can't wait to meet all you guys..feels good to be part of The Group you know.

Makaya

@Weiner: why don't you just go and get a life?

jumpin in

@conrad

It does not matter. It is all about psychology at this point.

Conrad

Technical issues down at the board today, will be over 200 sales going through tomorrow…

Navin R. Johnson

Weiner. Your buddy at Diary Queen already has a house with three illegal suites to help cover the mortgage that he soon won't be able to cover, eh? 🙂