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.
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A new proposal would hit homebuyers hard, especially the thousands of first-time buyers already struggling to be able to afford to buy.