President and chief executive Stuart Levings said Genworth is exercising "heightened vigilance" in underwriting home purchases in Western Canada in light of the sharp decline in oil prices.
"We haven't pulled out of the market by any means," Levings told an investor conference hosted by National Bank on Tuesday.
"What we're doing is we're looking at the stacked risk factors a lot closer — so people that have higher debt service ratios, that are employed in the oil and gas sector, that may be dependent on one income versus two, that are buying a home with five per cent down — we're going to take a lot closer look at that deal."
Levings said deals with multiple risk factors represent about 10 per cent of the business that Genworth does in the region.
Mortgage defaults, which have been at all-time lows in recent years thanks to fairly stable home prices and employment figures, are expected to rise "modestly," Levings said.
In Alberta, the increase will be more dramatic, driven by layoffs in the oilpatch.
A number of firms have announced hundreds of job cuts in recent months following the sharp drop in the price of oil, which is trading for less than half of its highs of last year.
Talisman Energy announced last week it was cutting its workforce by 10 to 15 per cent, or between 150 and 200 jobs, mostly at its head office in Calgary. ConocoPhillips Canada also announced it would cut about 200 jobs, mostly in its Calgary office, while Nexen said earlier this month it was slashing 400 jobs.
Home prices in the region are expected to decline by three to six per cent, Levings said.
Genworth says it has programs in place to support borrowers in financial trouble and prevent full-blown foreclosures.
"It's only a foreclosure that really matters because that's when there's an actual claim payment on our books," Levings said.
The Bank of Canada warned recently that the country's housing market could be overvalued by as much as 30 per cent.
However, Levings said he believes prices are only eight to 10 per cent overvalued on average, with figures higher in Toronto and Vancouver.