According to CMHC data from last quarter, residential borrowers who paid for mortgage default insurance had:
8% equity on average (92% loan-to-value)
Less than 10% down in almost 7 out of 10 cases
25-year amortizations, on average
Amortizations over 25 years, only 3.1% of the time
745 average credit scores
82.6% had scores of 700+ (scores range from 300 to 900)
CMHC doesn’t have a 680+ breakpoint in its credit score data but hopefully it adds one. A score of 680 is the minimum needed to qualify for higher debt ratio flexibility, as well as the best interest rates in many cases.
Average mortgage amounts of $230,416
Mortgages over $600,000, only 4.7% of the time
About the same as last year
25.5% average gross debt service (GDS) ratios
This is quite low as 32% is the traditional maximum
If we look at all transactionally-insured borrowers on CMHC’s books, not just those who closed last quarter:
9.3% have less than 10% equity
This speaks to both surging property values and people paying down their mortgages
51.4% took out amortizations over 25 years
This ratio will steadily drops thanks to the extinction of high-ratio amortizations beyond 25 years
730 is the average credit score
Recent borrowers have higher average scores than CMHC’s overall book.
CMHC should be commended for expanding the borrower data it discloses publicly. It shares a lot more than the other two insurers and the data thus far shows no obvious areas for concern.
That said, it still doesn’t provide some of the most important risk metrics of all. Most obvious is the lack of data on:
Total debt service (TDS) ratios
How close is the average government-backed borrower to the traditional 40% maximum debt ratio?
TDS by loan-to-value
How many people have a high TDS and less than 10% down?
This is one of the most telling metrics of all because folks with low equity and high debt ratios are among the riskiest prime borrowers
Average loan amount by loan-to-value
How big are the mortgages for people with only 5% down?
CMHC could answer all of these questions for the Canadian taxpayers who back the crown corporation, and hopefully it eventually does.
Mind you, if this data were available, it’s unlikely that it would reveal any serious cracks in CMHC’s hull. But we won’t know that until we see it.
Rob McLister, CMT
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