CMHC reports first-quarter profit up seven per cent from year ago

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OTTAWA – Canada Mortgage and Housing Corp. said Friday an improving economy helped it earn $406 million in its latest quarter, up seven per cent from a year ago.

The mortgage insurance agency said higher investment earnings and lower insurance claims help boost its profits for its first quarter.

The results compared with a profit of $378 million in the first three months of last year.

CMHC paid $102 million in insurance claims for the quarter, down from $133 million in the first quarter of 2013. Investment income increased to $149 million compared with $136 million in the first quarter of last year.

CMHC’s total insurance-in-force for the quarter ended March 31 was $555 billion, down $2 billion from the fourth quarter of 2013.

CMHC offers mortgage default insurance for homes as well as loans for multi-unit residential projects and portfolios of loans secured by residential properties.

The decrease in total insurance-in-force came as the agency issued insurance for 27,869 homes in the quarter, down from 29,846 a year ago, a drop the agency attributed to a loss in market share.

CMHC’s also issued portfolio insurance covering 6,785 units in the quarter, down from 7,240 a year ago and multi-unit residential insurance for 20,732 units, down from 30,166.

Banks and other lenders generally require mortgage loan insurance for buyers making a down payment of less than 20 per cent. The insurance protects the lenders from defaults, but the costs usually are paid by the borrowers.

An increase to the rates CMHC charges to insure mortgage loans by an average of 15 per cent went into effect on May 1.

Last week, the agency predicted the country’s housing market will continue to slow, but said it sees no major crash coming.

CMHC said in its latest forecast that the market will continue to weaken this year, before stabilizing.

The agency forecasts housing starts will range between 172,300 and 189,900 for a midpoint prediction of 181,100 this year, down from 187,923 in 2013 and 214,827 in 2012.

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