Mortgage Broker News
by Justin da Rosa | 21 Apr 2015
The Conservative government released its yearly budget Tuesday, and in it mentioned its continual monitoring of the housing market to ensure stability. And while mortgage rules came away untouched, the bulk insurance monolines and banks use to cover their conventional mortgage lending was referenced.
The government’s pledge on that subject wasn’t part of the budget speech, but made in the 500-plus pages Finance Minister Joe Oliver tabled in the House of Commons Tuesday.
“The Government will implement regulatory measures that limit the extension of portfolio insurance through the substitution of mortgages in insured pools, tie the use of portfolio insurance to CMHC securitization vehicles, and prohibit the use of government-backed insured mortgages as collateral in securitization vehicles that are not sponsored by CMHC,” the 2015 Federal budget states. “The Government continues to closely monitor the housing market and assess measures to further reduce taxpayer exposure and risks to the long-term stability of the sector.”
In 2012, CMHC’s announcement that it would restrict lender access to its own portfolio insurance fund ultimately prompted private insurers Genworth and Canada Guaranty to step up and grow their books on that business. It remains to be seen how any further limits on the use of bulk insurance would play out.
Tuesday’s budget, Joe Oliver’s first, is balanced with a projected surplus of $1.4 billion this year. The government expects that surplus to increase to $4.8 billion in 2019-2020.
The government has implemented a number of safeguards in a bid to “reinforce the housing finance framework,” including a number of changes and reviews to the Canada Mortgage and Housing Corporation (CMHC).
“The Government has recently made improvements to the housing finance framework to restrain the growth of taxpayer-backed mortgage insurance and securitization and enhance stability,” the budget states. “These include increasing fees on National Housing Act Mortgage-backed Securities and Canada Mortgage Bonds, and capping annual issuance on new guarantees under these programs.”