The Canada Mortgage and Housing Corporation (CMHC) has suspended its dividend payments to the federal government, redirecting funds to address Canada’s rental housing shortage.
The move, announced in CMHC’s second-quarter financial results, will amount to $145 million in the second quarter.
Instead of sending those profits to the federal government, the agency will reinvest them into initiatives aimed at expanding the country’s rental housing stock, particularly in markets where affordability is a critical issue.
CMHC said it has seen a “significant rise” in demand over the past year for its Multi-Unit insurance products that support the construction of more purpose-built rentals.
“It is encouraging to see continued increase in demand for our multi-unit insurance products which leads to increased rental housing supply,” said Michel Tremblay, Chief Financial Officer and Senior Vice-President, Corporate Services.
The agency added that, “While our current capital position remains strong, the preservation of capital allows our multi-unit business to grow and respond to the increased need in the market for the supply of purpose-built rental housing.”
Other highlights from CMHC’s Q2 results
- “Economic conditions continue to have a significant impact on our financial results. The sustained high interest environment from recent interest rate increases has led to continued higher investment and interest income in the first half of 2024.”
- “Arrears for mortgages insured by CMHC remain low at 0.28%, resulting in low levels of claims paid.”
- “High home prices combined with mortgage renewals at higher rates continue to challenge affordable homeownership. Housing starts at an annual pace of approximately 247,000 units in the first half of 2024 were 6% above the same period in 2023, but still fell short of the levels needed to achieve affordability.”
| Q2 2023 | Q2 2024 | Change | |
|---|---|---|---|
| Net income | $303M | $364M | +20% |
| Insured volumes (units): Transactional homeowner insurance | 13,741 | 14,743 | +7.3% |
| Insured volumes (units): Portfolio insurance | 4,718 | 2,685 | -43% |
| Insured volumes (units): Multi-unit residential insurance | 60,408 | 77,922 | +29% |
| Insurance-in-force | $403B | $424B | +5.2% |
| Canadian residential mortgages with CMHC insurance coverage | 19.1% | 19.5% | +40bps |
| National mortgage arrears rate (%) | 0.29% | 0.28% | -1bp |
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43% of mortgage holders obtained only one mortgage quote: survey
A full 43% of Canadian mortgage borrowers obtained only one mortgage quote before making their decision, potentially missing out on substantial savings.
That’s according findings from an EveryRate.ca survey, which identified mortgage holders aged 55 and older, as well as those from lower-income households, at being especially at risk of missing out on more competitive rates.
“It’s like picking the first car you see without exploring other options,” said Andy Hill, co-founder of EveryRate.ca. “Shopping around is essential to securing the best rate and maximizing savings.”
The survey revealed that 34% obtained multiple quotes from their mortgage professional.
Regionally, mortgage shoppers in British Columbia were most proactive, with 60% seeking out quotes from more than one source. That was followed closely by Alberta (58%) and Ontario (57%).
Meanwhile, mortgage shoppers in Atlantic Canada were lease likely to shop around, with 50% seeking out multiple quotes.
Mortgage snippets
- B.C. real estate agent suspended for forging signature: British Columbia’s real estate regulator has suspended agent Ramandeep Singh Kooner’s licence for six months after he admitted to forging signatures in a 2015 land assembly deal in Richmond, B.C. The B.C. Financial Services Authority (BCFSA) also imposed a $10,000 fine and $5,000 in enforcement costs.
Kooner, previously with Sutton Group Seafair Realty, submitted city authorization letters without confirming consent from two of the three property owners involved. The owners discovered the forgery when they checked with the city, leading to a complaint to the Real Estate Council of B.C., the BCFSA’s predecessor.
The BCFSA stressed that such actions undermine the integrity of the real estate industry. Sutton Group Seafair Realty cooperated with the investigation and declined further comment.
- CWB shareholders approve National Bank takeover: Shareholders of Canadian Western Bank (CWB) have overwhelmingly approved the sale of the Edmonton-based company to National Bank of Canada, with 99.78% voting in favour at a special meeting on Tuesday.
The all-share deal, valued at approximately $5 billion, offers a more than 100% premium over CWB’s pre-announcement trading price. The acquisition, announced in June, would allow National Bank to expand its operations further into Western Canada, particularly Alberta and British Columbia.
However, the transaction is still subject to regulatory approval, with the deal expected to close next year if approved. For more details, visit the full release here.
- Canadian labour productivity continues to weaken: Canada’s labour productivity saw a 0.2% decline in the second quarter, marking its second consecutive quarterly drop. While business output rose by 0.5%, hours worked increased at a faster pace, outstripping productivity gains. Service industries led the productivity decrease, with only a slight improvement in goods production.
“This persistently weak performance continues to knock Canada further down the global productivity ladder, noted BMO chief economist Douglas Porter. “Looking at GDP per hours worked in U.S. dollar terms, the OECD finds that Canada has now slipped even below Italy and Spain, and is losing sight of the U.S. and most Northern European economies.”
- Canada records $684M trade surplus in July: Canada posted a $684-million merchandise trade surplus in July, according to Statistics Canada. This comes after a downward revision of June’s figures, shifting from a reported $638-million surplus to a $179-million deficit.
Exports fell 0.4%, largely due to a 5.4% decline in auto exports amid slower production. Imports dropped 1.7%, driven by a 10.8% decrease in auto imports.
EconoScope: Key economic releases on tap for next week
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Andy Hill canadian western bank CMHC cmhc quarterly results cwb digital mortgage conference EconoScope EveryRate.ca fraud labour productivity Merchandise trade balance Michel Tremblay national bank of canada Ramandeep Singh Kooner weekly mortgage digest
Last modified: September 5, 2024