Mortgage Insurance Insights from Genworth

There’s always something to learn about the mortgage industry in Genworth Canada's earnings announcements. Here are some takeaways from its latest report:

• A Shrinking High-ratio Mortgage Market:

Genworth says that last July’s insured mortgage rule changes “will likely reduce the annual residential mortgage insurance” market for high loan-to-value mortgages “by approximately 15%, as compared to the 2012 market size.”

In a report yesterday, National Bank Financial said that Genworth “wrote 16% less new insurance on high loan-to-value (LTV) mortgages than it did a year ago, mainly as a result of new mortgage insurance rules introduced by the federal government last July that effectively eliminated insurance for refinance transactions.”

• Bulking up on Bulk Insurance:

In 2012 Genworth wrote $20.4 billion of new insurance on low loan-to-value mortgages. That compares to $4.2 billion in 2011. This is a direct result of “more low loan-to-value (bulk) mortgage insurance opportunities,” says the company. Those opportunities were created in large part when its #1 competitor, CMHC, started pulling back from the bulk insurance business in late 2011.

• Fewer Arrears:

Genworth’s delinquency rate fell to a scant 0.14% last quarter, versus 0.20% a year earlier.

On a side note, Genworth MI Canada’s stock price has soared 47% from its low last July. Its investors apparently aren’t dreading a housing downturn as much as some had speculated last summer.

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Rob McLister, CMT