CMHC Mortgage Loan Insurance at Glance

Document Sample
CMHC Mortgage Loan Insurance at Glance Powered By Docstoc
					                                                                                                    CMHC Mortgage Loan Insurance at a Glance
                 CMHC Mortgage Loan                                               dId yOU knOW?
                 Insurance at a Glance                                            Distribution of Homeowner

                                                                                  Average Amortization Period at Origination
Since 1954, the Corporation’s role in providing                                                                                                  25 years
                                                                                  (high and low ratio homeowner)
mortgage loan insurance has helped shape Canada’s
housing finance system and has been instrumental                                  Average Credit Score at Origination (high ratio)               724
in underpinning its strength in both good and bad
economic times. Since the mid-1990s, CMHC                                         Percentage of High Ratio Borrowers Who
has operated its mortgage loan insurance and its                                  Are Ahead of Their Payment Schedule                            64%
securitization guarantee programs on a commercial                                 (by any amount)

basis. This minimizes risks to taxpayers while also
                                                                                  Average Loan-to-Value Based
generating reasonable returns for the Government                                  on Updated Property Value
of Canada helping improve Canada’s fiscal position.
In the following pages, you will find information                                 Average Equity                                                 45%
about various characteristics of CMHC’s mortgage
loan insurance business, as reported in CMHC’s                                    Average Outstanding Loan Amount
                                                                                  (high ratio)
most recent Quarterly Financial Report (as at
31 March 2012).

                                                                                 Prudent Underwriting Practices
Helping Canadians from Coast-to-Coast                                            Help to keep Arrears Rates Low
    distribution of Approved Units for Multi-Unit
                                                                                                            Arrears Rates (%)
  Residential and High Ratio Homeowner Properties
100                                                                              0.4
 80                                                                              0.3
 20                                                                              0.1
  0                                                                              0.0
        Canada    Atlantic     Quebec       Ontario     Prairies and  British          Q1 2011        Q2 2011          Q3 2011         Q4 2011   Q1 2012*
                                                         Territories Columbia
   Homeowner properties      Multi-unit residential properties   Homeowner                                 CMHC                         CBA
   in rural areas and        of > 4 units (includes nursing      properties in     * Latest available CBA arrears rate is for January 2012.
   smaller communities       and retirement homes)               urban areas

CMHC continues to be the only mortgage loan insurer for large                    The strength of CMHC’s mortgage loan insurance portfolio
multi-unit residential properties including nursing and retirement               is further demonstrated in its mortgage arrears rate
homes. Our exclusive support for these forms of housing is critically            (borrowers who have missed three or more consecutive
important to the supply and maintenance of a range of housing                    payments). At 0.38%, CMHC’s mortgage arrears rate is in
options in Canada. CMHC is also the primary insurer for housing in               line with the industry trend as reported by the Canadian
rural areas and smaller Canadian markets. Nearly 43% of CMHC’s                   Bankers’ Association (CBA).
total rental and high ratio homeowner business in the first three                (
months of 2012 was in markets or for housing options that are less               banking-issues/469-canadas-strong-banking-system-
well served or not served at all by the private sector.                          benefiting-canadians)

date modified: May 29, 2012                                                                       Canada Mortgage and Housing Corporation               1
                                                                                          CMHC Mortgage Loan Insurance at a Glance

Prudent Risk Management
The profile of CMHC’s insurance-in-force demonstrates the nature and level of risk associated
with CMHC’s mortgage loan insurance business. CMHC’s insurance-in-force at the end of the first
quarter 2012 was approximately $570 billion with the risk exposure mitigated in a variety of ways.

    distribution of High Ratio Homeowner                                      ≥ 660 < 700
    Insurance-in-force by Credit Score at                                         16%                                        ≥ 700
    Origination (%)                                                                                                           73%
                                                                  ≥ 600 < 660
    CMHC has been able to maintain its strong market                  9%
    position and manage its risk through prudent
    underwriting practices. This is demonstrated by an
    average credit score of 724 for CMHC’s high-ratio
                                                                  = 0 < 600
    homeowner insurance-in-force at 31 March 2012.                   1%
    The high average credit score also demonstrates a
    strong ability among homebuyers with CMHC-
    insured mortgages to manage their debts.                       No score

   distribution of High-Ratio Homeowner
   Insurance-in-Force by Province/Territory (%)
   Consistent with its mandate, CMHC provides
   mortgage insurance in all Canadian markets,
   helping spread portfolio risk nationwide across                    0.5%

   all provinces and territories each with a distinct
   economic outlook.
                                                           12.5%                                           20.0%          0.3%
                                                                      16.7%             3.1%
                                                                                                                     2.2%        2.7%

                                                        Territories           Saskatchewan      Quebec          New Brunswick
                                                        British Columbia      Manitoba          Newfoundland    Nova Scotia
                                                                                                and Labrador
                                                        Alberta               Ontario                           Prince Edward Island

                                                                                         Canada Mortgage and Housing Corporation        2
                                                                                                           CMHC Mortgage Loan Insurance at a Glance

          Prudent Risk Management

               distribution of Homeowner Insurance-In-Force                                     distribution of High Ratio Homeowner
                   by Loan-to-Value (LTV) Ratio Based on                                        Insurance-in-Force by Loan Amount ($)
                        Updated Property Values1 (%)                                    %

                  %                                                                     40
                                                               Average LTV
                 20                                                                     10
                  0                                                                      0
                      ≤ 80%     > 80.01    > 90.01    > 95%                                  Under        Over        Over        Over        Over     Over
                                ≤ 90%      ≤ 95%                                             $60,000     $60,000    $100,000    $250,000    $400,000 $550,000
                                                                                                       to $100,000 to $250,000 to $400,000 to $550,000

            The vast majority of CMHC-insured mortgages currently                      The average outstanding loan amount for homeowners
            have loan-to-value ratios of 80% or less based on updated                  who took out high ratio loans above 80% loan-to-value at
            property values.                                                           origination was $172,879. The figure reflects the regular
                                                                                       amortization of loan balances as well as accelerated
                                                                                       payments by borrowers.

    LTV based on the updated value of the property when using changes in local resale prices.

                                                                                                          Canada Mortgage and Housing Corporation               3