Canada’s two private mortgage insurance companies, Genworth Canada and Canada Guaranty have informed Canadian mortgage lenders that they will continue to offer self-employed insured mortgages as well as second home mortgages, and not follow in the steps of CMHC which last week announced that they would be continuing their similar programs.
I stated a few days ago that I was not particularly worried about the CMHC decision from a professional standpoint as the programs they were eliminating were not used very much and would not impact my ability much as a mortgage broker to get mortgages approved. I was more concerned about Genworth and/or Canada Guaranty discontinuing their programs, as particularly the Genworth self-employed mortgage offering is a better product and is more popular than the CMHC product was.
Self-employed mortgage insurance good for real estate market
Thankfully for the market and for self-employed mortgage borrowers, we can continue to obtain mortgage approvals for self employed borrowers with less than 35 percent down-payment, and with as little as 10 percent down-payment. It would have created a significant void in mortgage lending if none of the insurers had continued with the program.
I also think it is beneficial for the insurers to keep this program, as the premiums charged for it are higher than fully qualified insured mortgages, and with Genworth reporting lower claims and improved revenues recently, it seems that their operations are strong just as they are. The main protection they will need is strong adjudication of individual loan applications to make sure that they minimalize riskier mortgages within their insured portfolio.
Overall, it is also worth noting that lending options are starting to open up a little more over the past year, which is a positive sign that confidence is being restored to the economy and the housing market for the first time since the 2008 U.S. housing collapse. It can only serve as positive news to homeowners that the market will continue to stay strong and home prices will continue to increase steadily.