Last week the International Monetary Fund came out saying that Ottawa should back away from government insured mortgages taken on by CMHC. And while some may have expected the Finance Minister to come back swinging, he actually told a group of industry insiders on Friday that he agreed with the global organization, and said that if there needs to be further intervention, he’s prepared to step in once again.
Mortgages first started being insured after World War II, as a measure to ensure that soldiers returning home from war would be able to afford a place to live. Now, it insures about 90 per cent of the insured mortgages in Canada, and those mortgages are for anyone that can’t come up with a full 20 per cent down payment.
“Regrettably,” the Finance Minister said on Friday, “Canada Mortgage and Housing Corp. has become something more grand, I think, than it was intended to be.”
During that conference Flaherty did point to the four changes he’s made within the past four years, including those that restricted amortizations on insured mortgages to just 25 years last summer. He also stated that,
“If we had to do it again, we’d do it again.”
But before anyone panic and starts to believe that this is code for Flaherty stepping in any time soon, he did mention that he doesn’t see a reason for doing so at the moment. He did say that Ottawa has been imposing a risk fee on new CMHC premiums while they try to “balance things.”
He also pointed to Genworth, the other insurer in Canada, saying that CMHC,nor the taxpayers, is taking on all the risk.
“It has competitors in the private sector, thank goodness, so we’ll see over time what the role should be.”
Flaherty has proven in the past that he has no problem with making changes to government-backed mortgage insurance. Not only did he make changes last year, but he’s also spoken many times in the past of how he’s not afraid to make more changes.