It’s a common perception that mortgage default insurance applies to only high-ratio mortgages. That’s not actually the case.
CMHC had $472.6 billion in mortgage insurance outstanding as of December 31. Of that total, 71.1% of its insured mortgages had a loan-to-value of 80% or less, based on current home values.
Only 4.5% had LTVs over 95%, and roughly 87% of CMHC-insured mortgagors had 10% or more equity.
(Source: Insurance-in-force data from CMHC’s 2009 Annual Report)
Does this include portfolio insured mortages???
yes it does
The amount of insurance CMHC has out there amazes me. This company is owned by our Federal Government. What happens if the Canadian housing market takes a downturn. Very interesting.
As far as I know, the CMHC is a money maker for the Government, not a liability.
Anyone have the figures?
931M net income in 2009 and like all insurers, they have actuarial calculated reserve funds set aside for future claims.
http://www.cmhc.ca/en/corp/about/anrecopl/upload/CMHC_AR2009_MDA-2005-2010-Highlights.pdf
Presenting these numbers are great. I would like to see GE’s figures as well. Will link this article to my site’s blog…http://sudburymortgagebrokers.com.
VERY INTERESTING (thanks for posting)… the numbers are fairly positive.
The size and scale of the dollar amounts is a bit scary though: if house prices were to decline 10%, $61.4B worth of CMHC-insured mortgages would be underwater ($472.6B x 13%).
Some other interesting stats:
Approval Percentage: 39.7% of mortgages were approved in 2009 vs. target of 33% (20% over target)
$183B in insurance for 2009 vs. target of $139B (32% over target)
Net Insurance Claims: $1.1B vs. target of $279M (4x the target)
Hi umderk04,
When values fall then it’ll put pressure on default rates. But the biggest determinant of default rate is, and will continue to be, employment growth.
Cheers,
Rob
Does this account for the insured low ratio mortgages? (from the Dept of Finance)
“Mortgages are sometimes insured after origination through what is often called portfolio insurance. High- and low-ratio mortgages are often combined to create a portfolio that is sold to investors (i.e., securitized).”
Yep
Just to clarify…
the table shows the $amount insured outstanding (ie. net of principle paid), compared to the original valuation and also the updated valuation.
at this is based upon updated valuations.