45 per cent of all Canadian covered by CMHC insurance

Trois articles sur les risques élevés de la bulle immobilière au Canada, rien de nouveau en soi, ça fait des années que j’en parle.
Par contre, puisque que l’économie stagne, les risques sont de plus en plus élevés, et bien sûr, le peuple est responsable de plus de 551 milliards de prêts hypothécaires les plus à risques et entre-temps nos banques canadiennes font de juteux profits.
Le premier article :  il semble que la SCHL est loin d’être aussi transparent, même si c’est une société de la couronne.
Deuxième article : The IMF has warned Canada about what it calls an overvalued housing market.
Troisième article provenant the ‘The Economist’ : Location, location, location

Extrait de :  CMHC Brings Home Ownership To The Masses, And Billions In Risk To Taxpayers, Huff Post, Sunny Freeman, 10/07/2014
When business professor Ian Lee asked a taxpayer-funded, multibillion-dollar insurance scheme for information about the risks in its portfolio, his request was denied. The information was deemed “commercially sensitive,” he recalls being told.
But it wasn’t, Lee insists. The Canada Mortgage and Housing Corp. is a government-run institution, not a commercial competitor. He was not asking for names or personal information, but for aggregated data about the borrowers most likely to default on their mortgage.
“They used this as an excuse to cloak what they were doing,” he said.
But Canadians deserve to know more, Lee believes, because every taxpayer has a stake in the high-risk mortgage game.
The Canada Mortgage and Housing Corporation’s insurance portfolio is currently worth $551 billion
·         equivalent to 30 per cent of Canada’s gross domestic product
·         and taxpayers ultimately bear the brunt of responsibility for covering any defaults.
As talk about a potential housing bubble and rising debt loads looms over the Canadian economy, there are growing calls for change at the CMHC — ranging from providing more transparency with its data on the Canadian housing market to reining in its mortgage insurance business, or even getting out of mortgage insurance altogether.
Federal laws require mortgage insurance for anyone who cannot scrape together 20 per cent of a house’s value for a down payment. That tacks another one to three per cent onto the cost of a mortgage.
Using August’s national average selling price of $398,618, that amounts to an extra $12,556 for an owner with just five per cent down.
GDP par industriesCMHC’s mortgage insurance business was founded in 1954 to provide cover for banks, which were reluctant to lend to riskier borrowers. Its existence means there is zero risk for banks on the insured mortgages they approve. By encouraging banks to lend more, it has helped millions of Canadians gain access to home ownership.
But as a result, CMHC has been accused of fuelling an overheated housing market with taxpayer money.
Évidemment, approuvé par nos politiciens pour faire
de l’économie artificielle
par endettement.
Household debt income ratio
Some are concerned that the government’s explicit stake in the mortgage game could cause a real estate crash as bad as — or even worse than — the one the United States went through in 2008-2009, because taxpayers would be on the hook to pay for every loan that goes bad. In the U.S., most mortgage insurance is provided by private companies.
It’s not that anyone is accusing the government of wrongdoing – Canada’s safe-lending practices during the recession earned it international praise as a bastion of safety against the worst effects of the U.S. housing crisis.
Even so, the CMHC’s own policies before the crisis were too lax for many industry observers, including then-Bank of Canada governor David Dodge.
In 2006, for instance, CMHC agreed to back mortgages from homeowners with no down payment at all. That level has since been raised to five per cent, and the government has moved four times since the recession to tighten requirements.
The agency’s role has expanded from its initial 1946 mandate — to help foster home ownership during a post-war home shortage. It is now involved in everything from social housing projects to a green homes initiative.
Many feel the scope of the Crown corporation has become too large.
The International Monetary Fund took the unusual step last year to advise Canada to scale back its mortgage insurance business.
In one of his final speeches as finance minister, Jim Flaherty said “regrettably, CMHC became something rather more grand, I think, than it was intended to be.”
As of the end of June, about 45 per cent of all Canadian residential mortgages were covered by CMHC insurance. About one-third of all residential mortgages are now securitized (packaged and resold by banks to investors as bonds), up from 10 per cent in the early 2000s.
The government provides guarantees of principal and interest payments to investors in mortgage-backed securities, making them a safe and attractive investment, but also exposing the government to the very products behind the U.S. housing crash.
Insured vs uninsured
Ottawa also backs 90 per cent of another nearly $200 billion covered by two private insurers, Genworth Canada and Canada Guaranty. That means taxpayers are ultimately on the hook for more than half of the $1.1 trillion in outstanding mortgages.
There isn’t too much competition among the insurers. CMHC insures about 70 per cent of the market. All three raised their premiums at the same time. Canadians with less than five per cent equity in their home now pay 3.15 per cent of the value of their mortgage in insurance premiums.
Donc, il risque de payer drôlement longtemps,
 leurs maisons surévalués dû à une spéculation excessive
grâce à des intérêts trop bas
The CMHC Mortgage Loan Insurance premium is calculated as a percentage of the loan and is based on the size of your down payment. The higher the percentage of the total house price/value that you borrow, the higher percentage you will pay in insurance premiums. (1)
CMHC Mortgage Loan Insurance Cost
Some vocal industry watchers, such as Carleton University professor Lee and the C.D. Howe Institute’s Finn Poschmann, want the CMHC’s insurance business to be privatized to protect taxpayers and foster more competitive pricing and products.
The business has been profitable so far and delinquency rates are very low, less than 0.5 per cent. That’s not the issue.
The question is why the government is in the mortgage insurance business in the first place, when it doesn’t own life or auto insurance companies, Lee said.
Simple, on fait accroître le PIB artificiellement en surendettant sa population, puisque ceux-ci ont déjà sur endetter l’État.
Le problème quand le pays est surendetté et son peuple aussi, comment fait-on pour faire accroître l’économie ?
1.      On peut imprimer de l’argent ou du crédit, si tu es capable de le faire, par contre cela fait de l’inflation.
2.      On peut espérer qu’un miracle va avoir lieu, mais comme les gens sont surendettés, il ne consomme plus et l’économie s’écrase.
Évidemment, si l’on avait eu des politiciens responsables, il aurait dit à son peuple qu’on ne peut éternellement avoir une économie ayant une croissance de 3 % et plus du PIB. 
Pour un pays mature, il faut viser 1.5 % impliquant une réduction des dépenses.
Ho !,  quel malheur, je risque de perdre des votes.
 “The government of Canada shouldn’t own the hockey teams that it’s refereeing,” he said.
Rob McLister, editor of CanadianMortgageTrends.com, points out that privatization would also mean more people would be rejected for mortgages.
The CMHC was founded to help people who would normally be rejected, such as those who live in rural and smaller markets that may not be served by private insurers.
If the CMHC isn’t there to help those people, the private sector certainly isn’t going to, he said, since it has less incentive to help risky low-income borrowers buy a home. In addition, investors in securitized mortgages feel safer having the government than a private company as a partner in case of default.
Even the CMHC’s critics see privatization as an extreme scenario that would require years of deliberation.
·         But if privatization isn’t going to happen any time soon, should the corporation make reforms to protect taxpayers in the event of a crash?
·         And should taxpayers have access to information about what it is they’re funding?
The CMHC’s new president and CEO, Evan Siddall, seems to think so. In the 10 months since he was appointed, the former Bank of Montreal and Goldman Sachs banker has worked toward changes.
Under his direction, CMHC has raised insurance premiums, stopped insuring second houses, undertaken a study of how many condos are investor-owned and stopped insuring new condo construction.
It may not sound revolutionary to the average Canadian, but Siddall said in a recent speech that the institution is “looking into risk-sharing with lenders to further confront moral hazard.”
The CMHC declined a request for an interview with Siddall but a spokesperson confirmed in an email that it is “re-examining our role in the Canadian housing and financial markets” and exploring ways to “further strengthen Canada's housing finance framework.”
Risk-sharing with the banks would mean lenders would pay a certain amount out of pocket before the insurer pays out the balance when a homeowner defaults. It’s a solution that’s being floated by top economists.
Some believe part of the Canadian market’s heat comes from lenient lending processes that might be a little more stringent if lenders had “skin in the game,” Ian Lee said.
“We know that people’s behaviour — both individuals and corporations — changes ... when they have some of their own skin or money or resources at risk.”
Although the CMHC says it is open to considering a new way to do business, it also cautions there are no immediate plans for an overhaul. Finance Minister Joe Oliver has said the government’s decision to study changes such as passing on more risk to lenders is more of a long-term issue that does not require immediate movement.
“Any changes being considered would require consultation with the industry and careful consideration by CMHC, the Department of Finance and other federal agencies,” the agency said in a statement to HuffPost.
But the agency is moving towards transparency. Just a few months ago, it started releasing a “supplement” along with its quarterly financial statements that includes more information about its insurance portfolio, including breakdowns of the type of insured borrowers by province, credit score and loan amount. That will help Lee and others conduct the sort of trend analysis he feels is needed to help shed light on the potential risks to taxpayers in the event of a crash.
“I think we are slowly, slowly going in the right direction,” Lee said.
“Good public policy needs good information. And when you’re talking about something as technical as mortgages and real estate values, you can’t work in a vacuum, just flying around without data. You need hard data to see the trends.”

Extrait de : Canada's Housing Market Draws IMF Warning, The Huffington Post Canada, 10/08/2014
IMF managing director Christine Lagarde is pictured at left.
The IMF has warned Canada about what it calls an overvalued housing market.
The International Monetary Fund (IMF) is reminding Canada that its overvalued housing market remains a vulnerability, even as it expects the economy to grow this year and next.
The IMF encouraged "continued vigilance" around real estate in its latest Global Economic Outlook, saying that housing prices remain "high relative to both income and rents" and estimating them at about "10 per cent higher than fundamental values."
It went on to say housing trends could necessitate more regulation.
But its estimate is modest compared to one issued by The Economist last month, which said Canada is among nine countries whose housing markets are overvalued by at least 25 per cent.
It's not the first time that the IMF has warned Canada over its real estate.
Last year it said the federal government should phase out the practice of insuring mortgages through the Canada Mortgage and Housing Corporation (CMHC), saying it exposes taxpayers to financial risk.
The latest warning comes as analysts reiterate their fears that Canada is experiencing a housing bubble, with one money manager saying it could pop next year.
But those concerns aren't shared by people within Canada's political class.
Prime Minister Stephen Harper tried to deflect fears about a possible housing crisis last month, saying that a minority of Canadian families would be harmed by a price correction or a boost in interest rates.
Évidemment, il ne faut pas faire paniquer la population qu’on est dans une bulle instauré par nos politiciens, entre temps leurs petits amis font des profits juteux.
·         Mais parler aux jeunes, comment il est franchement impossible d’acquérir une première maison à moins de sur –endetter.
·         Et demander à la population locale dans les grandes villes, telles que Toronto, Vancouver et même Montréal, dû à une sur spéculation excessive entres autres par les étrangers (flip), comment les prix sont devenus disproportionnés par rapport à leurs revenus.
Bank of Canada Governor Stephen Poloz likewise doesn't feel Canada is in a housing bubble.
Évidemment, gang de pourris, et si cela va mal qui va payer les pots cassés, certainement pas eux avec leurs grosses retraites dorées.

Extrait de: Location, location, location, The Economist, Aug 29th 2014, 13:32 by J.M.F. and D.H.
Our interactive guide to the world's housing markets
HOUSE prices are going through the roof. They are rising in 18 of the 23 economies that we track. And in eight of them, prices are increasing at a faster pace than three months ago. Yet there are also weak spots, particularly in Europe. Prices in Spain, which had one of the biggest property bubbles before the crisis, are still falling. They have kept declining in France and Italy too. In contrast, housing markets are buoyant in some northern European countries, notably Britain and Sweden, and especially so in their capital cities (see article).
Since some form of recovery was bound to occur after the housing slump, how worrying are the renewed signs of exuberance? To assess whether house prices are at sustainable levels, we use two yardsticks.
·         One is affordability, measured by the ratio of prices to income per person after tax.
·         The other is the case for investing in housing, based on the ratio of house prices to rents, much as stockmarket investors look at the ratio of equity prices to earnings.
If these gauges are higher than their historical averages then property is deemed overvalued; if they are lower, it is undervalued.
Based on an average of these measures, houses are at least 25% overvalued in nine countries.
Judged by rents, the most glaring examples are in Hong Kong, Canada and New Zealand. The overshoot in these economies and others bears an unhappy resemblance to the situation that prevailed in America at the height of its boom, just before the financial crisis. Explore the data in our interactive chart below (updated on August 27th 2014) and try to spot which bubble might pop next.
Price in real term
Price against rent