CMHC’s 2010 Canadian Housing Observer

Canadian-Housing-Observer CMHC just released the 2010 version of its flagship publication, the Canadian Housing Observer.

Here’s a rundown of its mortgage-related data (our comments in italics)…


Housing’s Economic Impact

  • Housing-related economic activity was $307 billion last year—about 1/5 of Canada’s GDP
  • Real estate comprises over 40% of Canadian household assets

Mortgage Debt

  • Mortgage payments were 33% of average disposable income in Q4 2009, not far from the 31% historical averageThis ratio changes when rates and home prices go up and down.

Home Equity

  • The average Canadian homeowner has 74% equity versus just 43% for U.S. homeowners
  • 60% of Canadian homeowners have a mortgage.
  • 80% of mortgagors have at least 20% equity
  • 9% of mortgagors have less than 10% equity
  • 18% of homeowners withdrew equity in the 12 months leading up to Oct. 2009, down from 22% in the prior year


(Click to enlarge)

Mortgage Brokers

  • Mortgage brokers originated 38% of new mortgages in 2009

Recent insider estimates suggest broker share is in the 20-25% range today as banks grow their sales forces and the rate wars intensify.

Mortgage Funding

  • 60% of mortgages are funded through deposits
  • 32% are funded through mortgage-backed securities

CMHC says: “The majority of the securitization funding done by Canadian banks is through government-backed programs where mortgage loan insurance is mandatory.”

  • 8% of mortgages are funded via other means, including covered bonds
  • The Canada Mortgage Bond (CMB) market grew 7.8% in 2009 to $175.6 billion


  • Allocation of outstanding mortgage credit:
    • Chartered Banks: 48%
    • NHA Mortgage-backed Securities: 30%
    • Credit Unions: 13%
    • Other (Finance companies, trust co., life insurers, etc.): 9%
  • Mortgages by type of dwelling
    • Single-detached properties: 70.7%
    • Multi-family dwellings: 29.3%

Source:  CMHC

  1. All growth in mortgage credit continues to come from CMHC… the percentage held by the banks has flatlined in recent years, while MBS has skyrocketed.
    This tells me that virtually all new entrants into the housing market require CMHC insurance, and almost without anyone noticing, the Government has bet the future of the Canadian economy on high ratio mortgages.

  2. Hello Ponzi Man
    Pardon my inquisitiveness but do you have a source to substantiate these two claims?
    1> “All growth in mortgage credit continues to come from CMHC”
    2> “virtually all new entrants into the housing market require CMHC insurance”
    While we’re on the topic, what percentage of home buyers are “new entrants”? Maybe you’d be so kind as to cite a source for this statistic as well?

  3. Look at the chart for “total mortgage credit” (3-5 on page 37).
    The amount of mortgage credit provided by the banks, credit unions, and “other” has actually decreased since 2007… but the NHA MBS amount of mortgage credit basically doubled over that same 2-year period.
    The visual chart makes it quite clear that the only entity feeding mortgage credit growth is CMHC.

  4. Hi Jackie,
    For a US-style crash we’d need things like unqualified lending, opaque securitization, non-recourse lending, etc.
    Canada’s market has none of those risk factors. The main risk factors we have are above-normal home prices (CIBC estimates 12% nationally) and debt, and those will indeed weigh on values. A 5-15% correction is totally feasible. But I can’t think of any reputable analysts who are predicting a 30+% crash like below the border.
    Have a nice weekend,

  5. At a 30% decrease, Canadian prices would still be higher than US prices.
    Can anyone explain to me why US avg RE prices are literally 50% of Canadian avg RE prices?

  6. Everything has always been cheaper in the USA. Cars, clothes, shoes, gas, food, etc…
    So why is suprising that house are too?
    Most people would justify this as because our dollar was always weaker than theirs (worth 70 cents), but now they’re about equal and it really seems like we are getting gouged here in Canada.

  7. Could it have anything to do with the desirability, stability or higher demand for housing in Canada? Just a thought.

  8. Most things are not substantially cheaper in the US. When something is less it is typically because there are lower taxes, which is then offset by lower gov’t provided services such as healthcare.
    But housing….does anyone truly believe that people will pay twice as much to live in Canada as the US?
    Vince, do you truly believe that the only difference is “desirability, stability and a higher demand”? What does that even mean??
    It seems like the only explanations given about why our housing is currently more expensive than any other western democracy is either “we’re different” or “our crash hasn’t happened yet”.

  9. Not all housing markets in the U.S. are being pummelled. Foreclosures in NYC are almost none existent while Miami is still being pummelled from all sides.
    If the Vancouver, Toronto, Calgary or Winnipeg housing market were to one day crash, it would likely be for different reasons than what is going on in some housing markets in the U.S.

  10. Actually, most things are much cheaper in the US, Dave. I can tell you this as a Canadian living in the great USA. The cars I have bought every couple of years are 5-10k cheaper than the identical car in Canada even though they’re made there. The gas to fill these cars is MUCH cheaper. Consumer staples, discretionaries, etc…all cheaper. The only thing I find more $$ in the US is insurance. I can say this because I am in Canada 2 or 3 times a month…what about you? Btw…these spreads were even higher pre-2007, when the US dollar was actually worth something.
    The US average house price is somewhere around 195k while Canada’s is about 320k (I think?). If you adjust that for the relative “cheapness” of Canada’s dollar (2007-current): 0.7 x 320k = 224k…not so different after all.
    There’s more to consider than just price, currency is one of those factors.

  11. In the US, most major purchases made in ones lifetime are significantly more expensive:
    1) Good college education for one kid is easily 200 K — annually 35 K for tuition, 5 K fees and 10 K living cost (room + board in a dorm).
    (Compare this to paying about $1800 per year for McGill instate tuition.)
    2) Professional degrees in the US get you seriously in debt — 250 K for a medical school degree, similarly for a decent MBA or law degree.
    3) Healthcare — good luck trying to get insured in the US after surviving cancer, heart attack or any other major illness that can hit you again. You will be refused due to a pre-existing condition.
    (The list can go on.)
    What you are saving on your flatscreen TV or cheaper Honda Civic or BMW is just not going to pay for the above.

  12. How do you people arrive at these allegations you spew out?
    If you go to a state college you pay the same if not less than you would in Canada. Of course, if you go out of state you would pay more, same as an international student studying in Canada. Most schools in Canada do not have higher “out of provice” tuition rates like they do in the states, but there are hundreds of schools in each state anyway!
    A medical degree in the USA does not cost 250k unless you are an international or out of state student or you’re going Ivy League (even the Ivy League isn’t that much!). MBAs in Canada can cost up to 80k per year too!
    I’m not suprised you cited healthcare as Canadians like to jump all over it, however, for the 70% of us that have healthcare (through work insurance programs), there is little or no extra cost. In fact, you guys probably pay more for your OHIP now (OHIP is no longer “free” in case you didn’t know).
    You people should not be allowed to cite these ridiculous claims with no sources to back them up. By the way, McGill tuition costs way more than $1800 per year…maybe this is from the 1970s?

  13. David,
    You’ve taken a somewhat selective and blinkered approach to your facts.
    “…for the 70% of us that have healthcare (through work insurance programs), there is little or no extra cost”.
    What about the other 30%? and having reviewed US employer programs, the employee contribution is typically much higher than any such equivalent program in Canada.
    “The US average house price is somewhere around 195k while Canada’s is about 320k (I think?). If you adjust that for the relative “cheapness” of Canada’s dollar (2007-current): 0.7 x 320k = 224k…not so different after all.”
    The US average was $175k last I heard. And Canada was at $325k. But your choice of 0.7 (close the historical low water mark CAD to USD) is misleading, compare to the long term avg of 0.9.
    At 0.9, our $325k is $297k usd. So the difference is 40%, and not 50% (which I had wrote earlier).
    There are others, but I think you take my point?

  14. OK so you challenged one of my 3 points with a decent rebuttal regarding insurance. The contribution that I make to health insurance in USA is not cheap, but when you account for the OHIP Premium and higher sales and income taxes in Canada, I don’t really see them being that much different. If you’d still like to refute this, I would love to see some actual sources. Remember, health care everywhere has to be paid for, it’s not as “free” to Canadians as they would like to think, somebody still has to pay.
    Regarding the some 30% of Americans that don’t have health insurance, I was simply talking about the “majority” of Americans; working, middle-class, mortgage-paying and law abiding. Surely you must realize that in any system there are always people who don’t benefit. I would bet in Canada that exactly 100% of the population is not receiving adequate health care either.
    Regarding, the USD/CAD exchange rate, the 30 year average is 0.7818 according to the Bank of Canada, I’m not sure where 0.9 comes from. When people use the term “about” it’s generally accepted that an estimation is being given, perhaps from memory, without a source (definitely not a fact). So I think the difference will be a little less than the 40% you calculated last post, but hopefully you can see that currency valuation is likely a factor, I never said it was the “only” factor. Moreover, it is one thing that can be quantified while things like buyer emotion etc. cannot.
    I may have gotten off topic on healthcare etc. but I was simply responding to a couple of posts
    that were full of nonfactual elements. What is with this always being right, elitist attitude in Canada?

  15. We’re talking about AVERAGES. So if only 70% of people in the US get healthcare (your figure), then the avg person gets only 70% healthcare. Canada has universal healtcare for citizens, so its 100% (admittedly excluding those who may have dropped off the grid and have not healthcare).
    90% is the average CAD to USD over the past 80 yrs.
    “What is with this always being right, elitist attitude in Canada?”
    Hmmm…irony, oh sweet irony…))

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