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Government-backed Canada Mortgage and Housing Corp (CMHC) said last week it would tighten rules for offering mortgage insurance from July 1, after forecasting declines of between 9% and 18% in home prices over the next 12 months.
The move would make it harder for riskier borrowers, who offer downpayments of less than 20%, to access CMHC’s default mortgage insurance.
Genworth Canada Chief Executive Officer Stuart Levings said the company, which provides mortgage default insurance to Canadian residential mortgage lenders, was able to manage its mortgage insurance exposure, including to borrowers with lower credit scores or higher debt service ratios.
Credit ratings agency DBRS Morningstar added CMHC’s changes to its underwriting requirements may make buying a home more challenging for insured borrowers, primarily first-time homebuyers.
Despite evaporating activity in the housing market due to the COVID-19 pandemic, prices have continued to rise as listings have fallen off alongside demand.
