At first glance the new CMHC rules sounds like a minor tweak rather than a major change, and it might be just that.
When the CMHC announced the change they specified that the products being eliminated made up less than 3% of their insured mortgage products by number of mortgages. What we haven’t seen anywhere are numbers in mortgage value, and BOM pointed this out yesterday:
“The Crown corporation has been offering insurance on second homes since 2005. It has been offering insurance to self-employed people without strong income validation since 2007.”
And then read this:
“CMHC says its second home program and its self-employed-without-third-party-income-validation programs combined account for less than 3 per cent of its insurance business volumes in term of the numbers of mortgages insured.”
CHMC has a pool of mortgages insured accumulated over the last 25 years. They have only offered the products they are cancelling for 7 to 9 years but they make up 3% of that pool. Simple math indicates over the last 7 years about 10% of mortgages would have been part of the program they are cancelling otherwise it could never reach 3% of the total pool which was already significant prior to the program starting.
So how much demand was there for insured mortgages on second homes and mortgages for the self employed without income verification? The numbers may be higher than we first thought.