The Globe and Mail reports in its Tuesday edition that Canada Mortgage and Housing Corp. is making it easier to get federal mortgage insurance, reversing tougher rules that were imposed a year ago.
The Globe's Rachelle Younglai writes that the federal housing agency admitted to making a costly mistake in unilaterally tightening its requirements last year, acknowledging it lost market share to competitors as a result.
"We are taking this action because our July, 2020, underwriting changes were not as effective as we had anticipated and we incurred the cost of a decline in our market share," the CMHC said in a statement.
Effective Monday, the mortgage insurer is lowering the required credit score and loosening other measurements that ensure homeowners have enough income to pay their mortgages and other debts. Bank of Montreal chief economist Douglas Porter said it is not obvious that the CMHC's reversal alone "will significantly stoke the market, or make the financial system less sound, as the business was likely being taken up by the private insurers."
Since last July, the CMHC's share of the mortgage insurance market has dropped precipitously, according to a research note from Royal Bank of Canada.
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