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CMHC said its changes were intended to protect homebuyers, reduce government and taxpayer risk and to help keep housing markets stable. It also gave a lift to CMHC’s publicly-traded competitor, Genworth MI Canada Inc. (now operating as Sagen MI Canada), as the company indicated in early November that CMHC’s changes had helped boost its share of the mortgage-default insurance market to somewhere in the high 30-per-cent range.
Canada Guaranty says its market share, like that of Sagen, is rising. However, the company says that was also the case before CMHC started fiddling with its underwriting criteria.
“Over the last several years Canada Guaranty has been steadily growing market share with the addition of new lenders and allocation increases over time with existing partners,” said Mary Putnam, vice president, sales and marketing, at Canada Guaranty, in an email. “Canada Guaranty’s market share was on the rise before CMHC’s changes and continued post CMHC restrictions. Canada Guaranty anticipates measured growth in 2021 and remains comfortable with its industry leading risk management.”
Mortgage-default insurance is crucial to the housing market. Banks must buy the insurance, which protects them in the event borrowers stop repaying their loans, when the amount of a mortgage is worth more than 80 per cent of a home’s value. The cost of premiums is typically passed on to the borrower, who is then able to get a loan without having to make a down payment of more than 20 per cent.
