Posted by: MonsterMortgage.ca
On May 30th, the CMHC, Canada Mortgage and Housing Corporation, reported that the crown corporation earned $406 million in the company’s latest quarter. The $406 million signifies a 7% increase in profit compared to the same quarter last year.
The agency credited Canada’s improving economic environment as the main cog in driving their improved profits. During the same quarter last year, CMHC reported a profit of $378 million.
A worry amongst critics of the CMHC is the corporation’s significant insurance book. Canadians who purchase homes with a down-payment of less than 20% are required to pay insurance premiums on the mortgage of their home. CMHC, Genworth Canada and Canada Guaranty represent the three corporations in the mortgage default insurance market, with CMHC responsible for a bulk of the insurance book. The insurers protect lenders from defaults, however; the premiums are typically paid by the home purchaser or borrower.
CMHC reported that they paid $102 million in insurance claims during the first quarter, a decrease of 23% compared to the same quarter last year. During the first quarter of 2013, the corporation paid $133 million in insurance claims.
Earlier in May, the agency predicted that the national Canadian housing market would not encounter a crash, but instead experience a soft-landing. A report released earlier in the year by the CMHC forecasted a decrease in new housing starts and a small increase in the price of resale properties for 2014 and 2015 respectively.