Investors who rely on mortgage default insurance for their purchases may find it harder to win, with the Canadian Mortgage and Housing Corporation (CMHC) cutting the number of insured mortgages it will issue in 2014.
CMHC announced in its 2013 annual report that it expects to have a total of $545 billion worth of insurance in force by the end of the year.
For the 2013 fiscal year, the crown corporation announced as of December 31 it had a total of $557 billion insurance in force, a $9 billion decrease over prior year. The total number of insured loans was not to exceed $600 billion, under section II of the NHA.
The number one insurer of mortgage-backed insurance also announced that it expects profits to drop in 2014.
“Projected Net Income is expected to decline from $1,507 million in 2013 to $1,297 million in 2014 and, in subsequent years of the planning period, to range between $1,248 million and $1,280 million as a result of lower revenues due to lower volumes combined with a slightly upward trend in insurance claims,” the report claims.
This, despite the fact that all mortgage insurers hiked their rates by 15 per cent effective May 1 of this year.
The report followed news that as of May 31 CMHC will no longer insure second homes and self-employed individuals who do not have third party income verification.
“CMHC helps Canadians meet their housing needs and contributes to the stability of the housing market and finance system” Steven Mennill, Senior Vice-President, Insurance with CMHC announced at the time of the cutbacks. “As part of the review of its mortgage loan insurance business, CMHC is evaluating its products and services to ensure they are aligned with these objectives.”
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