Canada Mortgage and Housing Corporation (CMHC) released today its second quarter financial report as well as complementary Mortgage Loan Insurance, Securitization, and Covered Bonds Supplements.
CMHC provides mortgage loan insurance and securitization guarantee programs to facilitate access to mortgage financing and to contribute to the stability of the financial system. Consistent with our mandate, CMHC is present in all markets and through all economic cycles.
Ensuring overall portfolio quality through prudent underwriting reduces the risk associated with the mortgage loan insurance business. An average credit score of 748 for transactional homeowner loans and an average gross debt service (GDS) ratio of 25.5% for the three-month period ended June 30, 2015 demonstrate a strong ability among homebuyers with CMHC-insured mortgages to manage their debts. The average insured loan amount for transactional homeowner mortgages in the quarter was $235,384.
The strength of CMHC’s portfolio is reflected in the overall arrears rate which was 0.34% as at June 30, 2015 while Claims Paid for the quarter totalled $88 million, an increase of $1 million from the same period last year.
CMHC has a legislated limit of $600 billion of insurance-in-force. During the second quarter, total insurance-in-force decreased by $9 billion to $534 billion when compared to year-end 2014. CMHC expects insurance-in-force to decline gradually as normal mortgage repayments continue to offset new insurance written.
CMHC’s securitization guarantee products facilitate access to funds for residential mortgage financing. New securities guaranteed for the second quarter were $24.6 billion, comprised of $14.6 billion for market NHA MBS and $10 billion for CMB. For 2015, the Minister of Finance has authorized CMHC to provide up to $80 billion for new guarantees of market NHA MBS and up to $40 billion of new guarantees for CMB.
CMHC’s mortgage loan insurance and securitization guarantee programs operate on a commercial basis without support from Canadian taxpayers. During the quarter, CMHC generated $344 million in net income from these activities. Total CMHC net income was $348 million for the quarter.
To further enhance transparency and expand the availability of data, CMHC has also published for the first time a Covered Bonds Supplement which outlines the Corporation’s activities as Administrator of the Registered Covered Bonds program. This complements the Mortgage Loan Insurance and Securitization Business Supplements.
These files contain a range of statistics and data on CMHC’s commercial activities and help readers better understand the business undertaken by CMHC. The supplements provide meaningful insight and provide market participants with data that will allow them to better analyze our activities in the Canadian housing market. These supplements will continue to be released quarterly.