Canada Mortgage and Housing Corporation (CMHC) released today its third 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. During the third quarter, CMHC provided mortgage loan insurance for over 80,000 units across the country.
Ensuring overall portfolio quality through prudent underwriting reduces the risk associated with the mortgage loan insurance business. An average credit score of 747 for transactional homeowner loans and an average gross debt service (GDS) ratio of 25.7% for the three-month period ended September 30, 2015 demonstrate a strong ability among homebuyers with CMHCinsured mortgages to manage their debts. The average insured loan amount for transactional homeowner mortgages in the quarter was $251,262.
The strength of CMHC’s portfolio is reflected in the overall arrears rate which was 0.35% as at September 30, 2015 while Claims Paid for the quarter totalled $76 million, a decrease of $38 million from the same period last year, as 2014 claims paid were high primarily due to the timing of payment processing. The total number of loans in arrears decreased slightly (3.8%) compared to year-end 2014.
CMHC has a legislated limit of $600 billion of insurance-in-force. During the third quarter, total insurance-in-force decreased by $18 billion to $525 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 third quarter were $31.9 billion, comprised of $22.7 billion for market NHA MBS and $9.2 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 $380 million in net income from these activities.
CMHC works closely with provinces, territories and housing providers, including First Nations, to help low-income Canadians access affordable, better quality housing. For the three-month period ended September 30, 2015, CMHC provided more than $463 million for housing programs on behalf of the Government of Canada.
To further enhance transparency and expand the availability of data, CMHC has also published Business Supplements in support of Mortgage Loan Insurance and Securitization, as well as a Covered Bonds Supplement which outlines the Corporation’s activities as Administrator of the Registered Covered Bonds program.
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.