Canada Mortgage and Housing Corporation

Canada Mortgage and Housing Corporation

May 30, 2017 10:01 ET

CMHC Releases 2017 First Quarter Financial Report

OTTAWA, ONTARIO--(Marketwired - May 30, 2017) - Canada Mortgage and Housing Corporation (CMHC) today released its 2017 first quarter financial report, as well as supplemental data on the Corporation's Mortgage Loan Insurance, Securitization, and Covered Bonds business activities.

First Quarter Highlights

  • CMHC provided more than $1.5 billion for housing programs on behalf of the Government of Canada.
  • Budget 2017 proposed new federal investments of over $11.2 billion over 11 years, as well as preservation of social housing funding and new low-cost loans to support affordable housing under a National Housing Strategy. CMHC is well positioned to lead the development of a National Housing Strategy, a once-in-a-lifetime opportunity to ensure Canadians have the housing they need and that they can afford.
  • Mortgage loan insurance facilitates access to housing finance for qualified Canadian homebuyers, supporting the stability of our financial system and economic growth. CMHC provided mortgage loan insurance for more than 48,000 units across the country. At March 31, 2017, CMHC's total insurance-in-force was $502 billion, well below CMHC's legislated insurance-in-force limit of $600 billion.
  • CMHC's securitization programs facilitate access to funds for residential mortgage lending. New securities guaranteed totalled $34.2 billion, consisting of $23.4 billion for National Housing Act Mortgage-Backed Securities and $10.8 billion for Canada Mortgage Bonds. As at March 31, 2017, CMHC's guarantees-in-force were $457 billion.
  • CMHC's mortgage loan insurance and securitization guarantee programs operate on a commercial basis without the need for funding from the Government. During the quarter, CMHC generated $370 million in net income from these activities.
  • On the continued strength of our performance, CMHC will pay a dividend of $145 million to our shareholder, the Government of Canada. Historically, CMHC has retained all of its net income as capital.

Mortgage Loan Insurance Portfolio Highlights

The quality of CMHC's mortgage loan insurance portfolio has been improving in recent years. As at March 31, 2017, the average equity CMHC-insured homeowners hold in their property is 35.2% and the overall arrears rate stood at 0.32%.

Additional portfolio highlights for the three months ended March 31, 2017:

  • Average loan amount of $260,826
  • Average credit score of 751
  • Average gross debt service (GDS) ratio of 26.9% and average total debt service (TDS) ratio of 36.6%

Dividend Framework

Going forward, CMHC will consider a quarterly dividend to the Government in the event its actual capital exceeds its capital target. CMHC will continue to hold capital for its commercial activities commensurate with its risk profile and in accordance with OSFI's updated regulatory capital requirements for mortgage insurers. Historically, CMHC has retained all of its net income as capital. CMHC has not paid any dividends since its creation in 1946.

The implementation of a dividend framework aligns with recent direction from the Government to Canadian federal financial Crown corporations. The framework will ensure that CMHC effectively manages its capital in relation to risk and pays dividends to the Government when capital is in excess of levels required to deliver its objectives. As CMHC's earnings are already consolidated into the Government's accounts, the dividend will not impact the Government's projected deficit.

CMHC also expects to declare a special dividend during the year to align its actual capital with its capital holding targets.

"As a Crown corporation, CMHC is the only mortgage insurer whose proceeds benefit all Canadians. The dividend balances returning excess capital to the Government of Canada with retaining enough capital to protect against housing market risks."

- Wojo Zielonka, Chief Financial Officer and Senior Vice-President, Capital Markets, Canada Mortgage and Housing Corporation

CMHC helps Canadians meet their housing needs. As Canada's authority on housing, we contribute to the stability of the housing market and financial system, provide support for Canadians in housing need, and offer objective housing research and advice to Canadian governments, consumers and the housing industry. Prudent risk management, strong corporate governance and transparency are cornerstones of our operations.

For more information, visit our website or follow us on Twitter, YouTube, LinkedIn and Facebook.

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