Just how risky is Canada Mortgage & Housing Corp.?
Looking at the numbers, one that jumps out is that there’s much more equity of an equity cushion in the mortgages that CMHC insures than you might think given the CMHC’s mission to insure so-called “high-ratio” borrowers who have relatively small down payments.
Here are some of the key figures:
-The insurer has about $570-billion of insurance in force, backing mortgages on Canadian homes.
-The average equity in the portfolio is 45 per cent.
-About half of that insurance was sold as insurance on high-ratio mortgages where the loan to value is more than 80 per cent of the value of the home.
-Most of the rest is so-called portfolio insurance purchased by banks on low-ratio mortgages. The mortgages don’t require insurance, but the banks purchase the extra coverage to get better treatment by regulators on their holdings of mortgages.
-As of March 31, about 7 per cent of the book is insurance on mortgages with equity of less than 10 per cent.
-About 17 per cent of the book is on mortgages with equity of between 10 per cent and 20 per cent.
-the average credit score of a high-ratio borrower insured by CMHC is 736
-Almost 80 per cent of the insurance is on mortgages worth between $100,000 and $400,000
(All figures from CMHC’s March 31 quarterly report.)