In a new report, the CD Howe Institute says that Canadian taxpayers need to be protected from the risk posed by the Canada Mortgage and Housing Corporation’s huge mortgage insurance book; currently around $1.2 trillion.
The think tank proposes that part of the agency’s brief should be separated into a new fund which would be paid for with higher mortgage insurance premiums. The idea would mean a new 10 per cent insurance surcharge, adding thousands of dollars to the cost of buying a home.
The institute calculates that if unemployment were to rise at the same time as house prices fall, there would be a $9 billion cost to the CMHC from mortgage defaults with the private sector hit with a similar figure.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate
A new proposal would hit homebuyers hard, especially the thousands of first-time buyers already struggling to be able to afford to buy.