policy
CMHC AND ITS SHRINKING MARKET SHARE The OSFI wasn’t the only federal institution to make changes to mortgage lending parameters this summer, as the Canada Mortgage and Housing Corporation (CMHC) took steps to actually ease its underwriting criteria. In the case of CMHC, unlike with OSFI, the move was less about stabilizing the market or addressing issues of risk, but rather to recapture market share that had been lost to private insurers over the prior year. Most notably, CMHC returned the upper- end debt service limits to 39% (gross) and 44% (total) from their previous thresholds
of 35% and 42%, respectively (originally changed in July 2020). For those borrowers who chose CMHC to be their mortgage insurer, this would have had the effect of expanding their purchasing power. That said, because Canada’s other primary insurers (namely Canada Guaranty and Genworth) had not followed CMHC’s lead in lowering their debt-service ratios in July 2020, borrowers had uninterrupted access to these “looser” underwriting parameters all along.
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