As you may know, the federal government is consulting on a proposed new model for a risk-sharing mechanism for government-backed mortgage insurance in Canada.

Mortgage Professionals Canada has made a submission to the Department of Finance on behalf of our members. Our position is that the proposed risk-sharing for government-backed insured mortgages would be negative and detrimental to the financial stability and security of the Canadian housing market and ultimately the Canadian consumer for the following reasons:

1. The current system is “sound, with strong foundations that promote financial stability, including robust regulation, prudential supervision of regulated financial institutions, and high underwriting standards” and without a moral hazard problem.
2. The proposed model will increase the costs for insured mortgages and could create significant regional price disparities.
3. The proposed model could potentially increase the risk of insolvency for some lenders and fundamentally change our mandatory insured mortgage structure.
4. Finally, if the government is concerned about tax-payer risk and consumer indebtedness, continuing to target the insured mortgage space with national policies will further impact first-time home buyers who are not responsible for any distortions within the Canadian housing market.