OTTAWA — Canada's national housing agency says new regulations introduced last fall decreased the size of the country's insured mortgage market by about 33 per cent year-over-year in the second quarter.
The Canada Mortgage and Housing Corp. says in its latest financial report that it provided mortgage loan insurance to 78,607 units in the three-month period ended June 30 compared to 117,463 units during the same period a year ago.
CMHC says volumes decreased largely as a result of the new regulations announced by the federal government in the fourth quarter of 2016.
'Stress tests' reduce buying power
The mortgage rules require all home buyers with less than a 20 per cent down payment to undergo a stress test to ensure the borrower can still service their loan should interest rates rise, or their personal finances fall. This cut into the purchasing power of some first-time homebuyers.
CMHC also says that it has also seen an improvement in the quality of its mortgage loan insurance portfolio.
The agency says its overall arrears rate was 0.29 per cent in the second quarter, which is down from 0.32 per cent in the first quarter.
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