“It is a recognition that CMHC has become a significant financial institution," Finance Minister Jim Flaherty said Thursday. "CMHC was created to assist in social housing (but) it’s become much more than that."
As promised, the Finance head tabled his budget implementation bill – proposed legislation guaranteed approval and set to transfer CMHC oversight to the Office of the Superintendent of Financial Services.
The move will also establish a registry to monitor the use of outstanding covered bonds, or mortgage-backed securities, being used by the banks to free up capital and keep their mortgage divisions churning.
The upshot for owner-occupied homebuyers is that the government plan sets the groundwork for tighter qualifying standards. For investors, it means that demand for their units could, in fact, grow as dreams of homeownership fade for many renters.
CMHC official guidelines are expected to tighten under OSFI oversight, making it harder to get all but the most standard A deals signed off on.
Still, the legislation may actually increase the appeal of both Genworth and Canada Guaranty as default insurers.
Alternative institutional and private lenders are also expected to see an uptick in the number of applications. That has, in fact, already happened, with Genworth’s director of risk operations pointing to the growing shift toward conventional lending and away from the harder-to-get high-ratio mortgage.
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