The Canada Mortgage and Housing Corporation (CMHC) has been under fire for some time now. Ever since the housing market has inflated beyond control in Canada, everyone is trying to come up with a solution to the problem. And most solutions have got something to do with CMHC. This week, perhaps the most serious remarks of all were made when Finance Minister Jim Flaherty stated that privatizing CMHC could happen, and that we should not assume the Crown corporation will always be owned by the Canadian people.
CMHC has been around since 1946, but it’s the first time that a Finance Minister has ever seriously considered privatizing the institution, let alone coming out and telling the entire Canadian public that the thought lingered on his mind.
“Is it inevitable that the government, the people of Canada, will always own the residential mortgage insurance company?” he asked on Wednesday when speaking to the Senate banking committee. “The answer to that is no, it’s not inevitable that that will be forever owned by the people of Canada because it’s not an essential service.”
A bold statement, perhaps. Especially at a time when CMHC is already at the centre of so much debate. And, albeit a bit bold, it’s not the first time Flaherty has said that he would consider such a move. Last month he told reporters, “I think there is a role to regulate but whether we, the Canadian people, have to be the owners and shareholders of a financial institution to do this is the question.”
But while there have already been some moves to CMHC that may have proven to be beneficial, such as changing their oversight as well as how they handle covered bonds, some Canadian and Ottawa mortgage brokers think that a full privatization could be even more disastrous for the Canadian housing market.
This move, the brokers say, would jeopardize the possibility of getting any kind of Canadian or Ottawa mortgage at all for many Canadians, and that first-time homebuyers would be especially hard hit.
However, the CD Howe Institute has also already weighed in on the topic, saying that stopping federal backing on mortgages would be the most beneficial thing for Canada’s housing market.
Do you think privatizing CMHC would help? Or do you think it’s not going to make a lick of difference until people start to get really serious about the amount of debt they’re taking on?
