Category Archives: Mortgage Insurance

Housing Prices Now and Then – Are Things Really That Bad?

If you believe the headlines, housing prices are on the rise across Canada even as consumer debt continues to pile up. The allure of low mortgage rates has thousands of home hunters bidding on what appear to be overpriced properties. But is that really the case?

When it comes to understanding the true price of a home, there’s one main factor to keep in mind – affordability. When the affordability of homes good, demand will usually exceed supply, leading to a hot housing market. So, just how affordable are homes in the current market? The answer from the Bank of Canada might surprise you. Continue reading →

Taking a Closer Look at CMHC’s 2011 Annual Report

The Canada Mortgage and Housing Corporation marked its 65th anniversary last week with the release of their 2011 annual report. As the nation’s top mortgage insurer (the organization backs $567 billion in default mortgage insurance), the CMHC controls roughly three-quarters of the nation’s mortgage default insurance. Despite inching ever closer to the $600 billion dollar government-imposed limit, the CMHC’s reported that there’s still plenty of room to meet the nation’s core demand for mortgage insurance. Continue reading →

Bank of Canada Maintains Overnight Rate

The Bank of Canada left its main interest rate untouched yesterday, maintaining a 1 percent overnight rate for the 13th consecutive review. While Governor Mark Carney painted a bright economic picture, rumblings of increased interest rates are becoming more and more prevalent.

Overall, the economic momentum in Canada is slightly firmer than the Bank expected back at the beginning of the year. The Bank has projected the Canadian economy to grow by 2.4 percent in both 2012 and 2013 before moderating to 2.2 percent in 2014. As such, the Bank anticipates that the economy will return to full capacity in the first half of 2013.  Continue reading →

How Much Would an Interest Rate Increase Hurt Your Budget?

According to a recent study by the Bank of Montreal, four in ten Canadians would feel the pinch if best rate mortgages saw a two percent interest rate increase. The study, which was compiled by Leger Marketing, found that 43 percent of Canadian homeowners believe an interest rate increase would either hamper their ability to pay their mortgage or leave them on rocky financial footing.

The study also found that one out of every five Canadians surveyed felt that a two percent increase would hurt their ability to make their mortgage, while 23 percent were unsure how a hike would affect them. Just over half, 57 percent of respondents felt that they could still afford their home if interest rates were to increase (the survey was completed online with a national sample of 150 Canadians over the age of 18). Continue reading →

Budget Overview: What It Means for CMHC

From pennies to old age pensions, yesterday’s budget was full of unexpected quirks. What wasn’t surprising to best rate mortgage brokers was the government’s discomfort with the Canada Mortgage and Housing Corporation. Ottawa has voiced concern over the activities of the Crown corporation for months now, threatening to toughen its oversight of this important economic organization. Yesterday, the budget took aim at the CMHC, which controls about 75% of the mortgage default insurance market. Currently, CMHC is backstopped by the federal government; however, the organization is coming close to a mandated limit of $600-billion thanks to a sizzling housing marketing and the proliferation of bank-offered portfolio insurance packages (for more background information on this issue, review our article “CMHC Backing Fewer Loans: A Look at the Repercussions“).

According to the budget, “the government will introduce enhancements to the governance and oversight framework of the Canada Mortgage and Housing Corporation.” Continue reading →