Holding Pattern: PPCLA

Holding Pattern: Alberta…

Mortgage Debt Grew, Fast

Mortgage Debt Grew at Fa…

Renovations remain top priority

Renovations remain a top…

Variable rates vs fixed rates

Variable rates vs fixed …

Opening borders may fuel Canadia…

Reopening of borders may…

BOC on Economic Recovery

Bank of Canada delivers …

Buying vs. Renting: Study

Buying vs. Renting: Home…

Forfeiture of $2.8 million condo

BC seeks forfeiture of $…

Household debt exceeds $2.5T

Canadian household debt …

Housing Market Vulnerable – CMHC

Canada’s housing market …

«
»
Social Media
Visit Us On TwitterVisit Us On FacebookVisit Us On Instagram

CMHC reveals outcome of stress test

  • Written by:

CMHC reveals outcome of stress test

by Kevin Orland

Canada Mortgage & Housing Corp., the nation’s housing agency and main provider of mortgage insurance, forecasts that it would remain solvent in all but the most extreme economic scenario envisioned in its annual stress test.

The CMHC said Thursday that it would be forced to recapitalize itself only if the economy underwent a second sharp downturn and the government failed to provide support for Canadians in need. That scenario, which it considers the least plausible outcome in its stress test, would entail a peak unemployment rate of 25%, a 48% drop in housing prices with 12 quarters of declining prices and as much as CA$15.3 billion in cumulative claim losses.

The agency still would be solvent under its second-most severe scenario, which includes another economic decline paired with a cyber-attack that reduced liquidity in the financial system but was mitigated by government support. That situation envisions a 24% peak unemployment rate, a 37% housing price drop with eight quarters of declining prices and as much as CA$8.42 billion in claim losses.

The baseline scenario entails a peak unemployment rate of 18.9%, a 14% housing price drop with five quarters of declining prices and as much as CA$3.61 billion in claim losses. In a news conference, Chief Risk Officer Nadine Leblanc emphasized that the scenarios aren’t predictions of the direction of the housing market but are instead representative of conditions that would place stress on the agency’s finances.

  • by Bloomberg 22 Jan 2021
  • Copyright Bloomberg News
  • https://www.mortgagebrokernews.ca/business-news/cmhc-reveals-outcome-of-stress-test-337132.aspx?utm_source=GA&utm_medium=20210122&utm_campaign=MBNW-Newsletter-20210122&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

cmplz_hide_cookiebanner:

Sections

Tools

About Us

Follow Us