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Letting Go of Risk
Effective June 19, 2023, CMHC increased its mortgage loan insurance premium rates for multi-unit properties. The premium rates will increase by 1.55% for MLI Select (multi-unit residential) properties and either 0.85% or 0.75% for standard rental housing, retirement and supportive housing, and student housing/single room occupancy (SRO) properties. These changes reflect CMHC’s adoption of the…
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Will the Fed be Bullied into a 50-Basis Point Cut?
The US unemployment rate rose by 0.2 percentage points to 4.3% in July, which triggered the Sahm Rule. This rule links the start of a recession to when the three-month moving average of the jobless rate rises at least half a percentage point above its low from the past 12 months. As a result, market…
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Can Mortgage Product Design Help to Address Housing Affordability?
Over the past 50 years, the housing market has introduced various mortgage products to address a range of challenges faced by homebuyers. This article reviews some of these offerings. Current mortgage products are relatively homogeneous. Most are fixed-rate payment products where both the rate and payment amount are fixed, or where the rate can vary…
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Tiptoeing Close to the Edge
The US Federal Reserve will conclude its fifth Federal Open Market Committee (FOMC) meeting of the year on July 31. Although the market isn’t expecting a change in policy at this meeting, the Fed’s communications should set the stage for a September rate cut. For the Federal Reserve to begin cutting rates, it is…
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Why CMHC Should Explore Synthetic Risk Transfer for Mortgage Securitization
Under the National Housing Act (NHA), a key objective of CMHC is to promote the efficient functioning and competitiveness of the housing finance market. CMHC’s securitization activities through the NHA MBS (mortgage-backed securities) and Canada Mortgage Bonds program are crucial vehicles for achieving this goal. Alongside its securitization business, CMHC operates a mortgage insurance business….
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Consumer Debt Trends Mortgage Investors Should Watch
An ongoing concern for mortgage investors is the ability of consumers to manage their debt. Many Canadians are currently facing challenges due to high debt levels, elevated interest rates, and high inflation. While household incomes and saving rates are higher than pre-pandemic levels, not all households have adjusted equally. In the coming quarters, financial pressures…
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Are we Plucking the Wrong Goose
The Greater Toronto Area’s (GTA) benchmark home price for June 2024 was $1,110,600. Land is a major part of that cost. We have looked at ways to reduce this burden through leasing and for low-income housing leasing under-utilizing government-owned land. What is not widely discussed is how our tax system makes housing unaffordable. A study…
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