OTTAWA: The Canada Mortgage and Housing Corporation (CMHC) continues to take an active role in supporting the Government response to COVID-19 and remains in a strong financial position should further action be required.
Details are available in CMHC’s quarterly financial report released today.
As part of proactive and coordinated measures to strengthen the financial system, the Government of Canada launched the Insured Mortgage Purchase Program (IMPP). This program provides banks and mortgage lenders access to reliable funding to ensure continued lending to Canadians. To date, we have purchased $5.8 billion of insured mortgage pools.
We are also administering the Canada Emergency Commercial Rent Assistance (CECRA) for
small businesses announced in April. The program lowers rent by at least 75 percent for small businesses experiencing financial hardship due to the pandemic.
To further support financial stability and reduce the risk to Canadian homebuyers in response to the anticipated impact of the pandemic on the economy, we have made changes to our underwriting criteria.
These changes came into effect July 1, when we began limiting the Gross to Total Debt Servicing (GDS/TDS) ratios to our standard requirements of 35 to 42; establishing a minimum credit score of 680 for at least one borrower; and no longer treating non-traditional sources of down payment that increase indebtedness as equity for insurance purposes.
We have also suspended refinancing for multi-unit mortgage insurance, except where the funds are used for repairs or reinvestment in housing.
“While it will take several months for the economic impacts of COVID-19 to fully materialize, some factors are starting to work their way into in our financial results — for example, we are starting to see the impacts in our provisions for insurance claims,” said Lisa Williams, CMHC’s Chief Financial Officer.
“We remain in a strong financial position to bear the full impacts of COVID-19, and to take further steps to support Canadians and the economic recovery if necessary.”
As of the previous quarter, Q1 2020, we have temporarily suspended our dividend in order
to conserve our capital to support further action by the Government, should the need arise.
Additional quarterly report highlights for the three-month period ending June 30, 2020 said:
• Our estimated provision for claims has increased for the second quarter, due to the evolving impact of COVID-19 on economic variables such as average unemployment rate, house price index, and real gross domestic product.
• Improved financial market projections resulted in a decrease in our expected credit loss provision — that is the expected losses on loans, loan commitments, and investments.
• Portfolio insurance volumes are expected to increase until the end of the year, as a result of the short-term expanded eligibility criteria that has allowed for participation in the IMPP.
• CMHC’s overall arrears rate was 0.34%. Payment deferrals related to COVID-19 are not included in this arrears data.
• At June 30, 2020, our capital position remains strong and our excess capital of $5 billion will serve to buffer future potential impacts to our capital position.
• Additional details about CECRA are available online. Information regarding CMHC‘s role in supporting the Government response to COVID-19 is also available online.
• We have also continued to work with the provinces and territories to co-develop the Canada Housing Benefit.