The number of new mortgages insured by the Canada Mortgage and Housing Corp. dropped by more than a third in the three months ending in September, another sign that Canada’s housing market is facing a downturn.
CMHC’s third-quarter results showed the volume of newly-bought homes insured by the government-run agency fell more than 37 per cent from the same period a year earlier, to 91,000 from approximately 145,000 in the same period a year earlier.
CMHC spokesperson Charles Sauriol said the agency is attributing the decline to the new mortgage rules put in place by Finance Minister Jim Flaherty in June. That echoes the assertions of many organizations in the real estate industry, including the Canadian Real Estate Association.
The degree to which the new rules are responsible for the housing slowdown is a matter of controversy. Evidence suggests weakness in the Toronto and Vancouver markets began before the new rules were announced.
The CMHC report notes that “the specific impacts of these changes are difficult to isolate from more general economic and housing market trends.”
CMHC insures “high-ratio” mortgages, meaning those mortgages where buyers put down less than 20 per cent of the value of the house as a down payment.
But while fewer people are taking on new mortgages, the numbers indicate those who do have mortgages are holding up well, financially. The percentage of CMHC-insured mortgages that were in arrears in the third quarter of 2012 was 0.34 per cent, slightly better than the 0.42 per cent recorded in the same period of 2011.
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