Canada Mortgage and Housing sees Q1 profit fall 15 per cent in wake of new rules

OTTAWA – Canada Mortgage and Housing Corp. says its earned $378 million in the first quarter, down 15 per cent from the same time last year, as it saw smaller gains on its investments.

The Crown corporation provides a variety of services, including mortgage insurance.

At the end of the first quarter of 2013, CMHC’s total insurance-in-force was $562.6 billion, $3.5 billion lower than the insurance-in-force at year end 2012.

The agency is limited to $600 billion in total outstanding insured amounts.

The lower earnings came as the market saw fewer housing starts and resales and tighter lending rules brought in last summer by Finance Minister Jim Flaherty.

CMHC said only 0.35 per cent of its mortgage insurance policies was in arrears during the quarter, unchanged from a year earlier.

It expects about $60 billion to $65 billion of mortgage repayments annually.

Earlier this year, Flaherty tabled changes to place CMHC under control of the Office of the Superintendent of Financial Institutions.

Flaherty said the move was necessary because CMHC had become a significant financial sector player in Canada and it was appropriate that it meet the high standards of soundness demanded by OSFI.

The CMHC guarantee, which essentially removes bank exposure to riskier mortgages, helped stabilize the housing market during the 2008-09 financial crisis by encouraging banks to keep lending.