This is a watershed year for Canada Mortgage and Housing Corporation (CMHC).
We are a 67-year-old company with a proud history but also a new, more focused mission, one that recognizes our role during the financial crisis and seeks to build an even stronger housing system for Canadians.
Our core mission is to “help Canadians meet their housing needs.”
Each of these words matters. Firstly, we exist to help all Canadians. As a Crown corporation, we are a bridge for Canadians hoping to access quality, affordable housing. Our role is to help qualified borrowers meet their housing “needs,” rather than their “wants.” Helping Canadians acquire the housing they aspire to is more appropriately the role of the private sector. We believe a vibrant, competitive insurance market will offer more choices for Canadians.
Measured against this yardstick, we have recently discontinued some mortgage loan insurance programs and re-priced others. On June 6, we announced the discontinuation of mortgage loan insurance for new condominium construction and limited our “low ratio” (greater than 20 per cent down-payment) product. Earlier in the year, we announced the discontinuation of our second home and self-employed without independent income validation products. These changes are the result of a review of our mortgage insurance business.
Ultimately, we are not looking to be larger. Instead, we want to be a safeguard for Canadian housing markets. Our focused mission acknowledges the value of private sector competition, underpinned by the safety net that a resilient CMHC provides. We firmly believe CMHC’s strong market presence is a source of confidence in Canadian housing finance markets. The recent financial crisis showed that a resilient CMHC provides a stronger foundation in both good times and bad than did our U.S. cousins, Fannie Mae and Freddie Mac.
We have restored CMHC to our core raison d’être: Helping Canadians meet their housing needs. Importantly, our decision to offer fewer products does not reflect a view that Canada’s housing market is overheated. Our most recent analysis and research tells us that the Canadian housing market is experiencing a soft landing. Some indicators suggest modest over-valuation, but not a housing bubble. That said, we don’t want to play a part in unintentionally contributing to higher house prices. After all, stoking demand increases prices, preventing some Canadians from buying homes.
My 1,900 colleagues across the country have embraced our more focused mission with enthusiasm. I work with Canada’s best collection of housing experts and expertise – truly Canada’s housing authority. CMHC has a deep reservoir of knowledge that can help people make wise housing decisions. We will be intensifying our market analysis and research in the months ahead. A more open and transparent CMHC will serve Canadians better.
As I have already noted, CMHC has a proud history. The proof of our commitment lies in the difference we’ve made. Our help is evident in the role we played in the last financial crisis, helping to shelter Canada through a challenging period. It is also apparent to the nearly 600,000 Canadian that receive housing assistance. We feel the daily impact of helping our fellow Canadians find a home and have access to affordable housing finance, no matter where they live or the type of housing they need. As Canada’s housing authority, this is how we contribute to the stability of Canada’s housing market. Simply put, this is why we exist.
Like any business, we exist in a rapidly changing environment. We will continue to explore ways to further improve what we do. As a key player managing the federal government’s housing market risk, we must limit taxpayer exposure to the housing market.
Our eyes are on the future now: Preparing for the next challenge, not the last one. A more focused CMHC is a better asset for Canada, both today and when the next economic challenge arises.
Evan Siddall is President and CEO of Canada Mortgage and Housing Corporation.