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Which Bank has the Most Insured Mortgages?

2 October 2013

CIBC is the nation’s biggest bank by assets, and recently the head of the bank’s retail banking operation, David Williamson, says that he’s very comfortable with their business mix. One reason for that is because they hold the largest amount of insured mortgages in the market. The question is, is that a good thing?

“In our own branded mortgage space we are now growing faster than anyone,” says Williamson.

Of course every bank wants to grow, especially in their consumer mortgage department. But with government rules and new restrictions coming down from CMHC, that’s been tough for the big banks to do. Tough for everyone, that is, except CIBC, according to them.

“We’ve got the vast majority of our mortgages insured with the government of Canada,” says Williamson. “Probably more than other banks.”

Of course Williamson is talking about those mortgages that are insured by CMHC, and therefore are backed by the Canadian government. But in August CMHC levied down strict regulations that put severe caps on the amount of mortgages they would insure from each individual bank. And it wasn’t just for the month of August. While they did put a cap of $350 million per bank on insured mortgages, they also said that they’d be coming out with a monthly schedule that would tell the institutions what they would be given in the amount of insurance for subsequent months.

So with most banks having an average of 60 per cent of their mortgages insured through the Crown corporation, how is it possible that CIBC has most of their mortgages insured?

And what if unemployment levels start to spike and household indebtedness becomes too much for most to handle? Sure, CIBC won’t be hurt any because the majority of their mortgages are insured. But what about the Canadian people? What about all that taxpayer money that’s going to be on the line in case of such an event?

It’s also disheartening to hear that CIBC is using this much mortgage insurance because this insurance comes in the form of fees that the consumers of mortgages have to pay. CIBC doesn’t use the mortgage brokerage channel at all, and therefore they most likely aren’t telling their mortgage consumers of other ways they can get around this expensive fee. Such options might include lowering their purchase price, using private mortgages, and other ways brokers know how to lower such fees as mortgage insurance.

There’s no doubt that CIBC is very happy with the amount of mortgages they have right now. But is it right that they’re taking them on when they know that it’s CMHC, and therefore Canadian taxpayers, that are on the hook for them? Shouldn’t businesses be responsible, at least for the most part, for the business they take on – and the risk that goes with it?

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