CMHC earned $387 million profit in Q3 amid cooling conditions in housing market

TORONTO — Canada Mortgage and Housing Corp. saw its third-quarter profit drop 17 per cent compared with a year ago as the housing market showed signs of cooling.

The country's largest mortgage insurer says it earned $387 million for the three months ending on Sept. 30, down from $467 million in the same period a year earlier.

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Revenue totalled $1.05 billion in the third quarter, compared with $1.26 billion last year.

The agency anticipates tighter mortgage rules, rising interest rates and a slowing economy to reduce demand for housing and continue to impact its earnings over the near term.

CMHC says these factors have already had an effect on the average price of a home in Canada on the Multiple Listing Service (MLS). The $453,233 average price during the first eight months of this year amounted to a 3.7 per cent drop from the same period a year earlier, making it the first decline in home prices since the Great Recession of 2009.

It noted that sales activity has also declined during the same period, falling 11.7 per cent to 327,206 units, and national housing starts remain flat, coming in at 144,644 units.

The agency says for the first three quarters of 2018, the average CMHC-insured homebuyer bought a home for nearly $276,000 with a down payment of 7.7 per cent. Those from British Columbia and Ontario made the highest average down payments, with 8.8 per cent and 8.7 per cent.

It says nearly all CMHC-insured homebuyers chose a 25-year amortization period, with 31 per cent opting for a variable-rate mortgage over a fixed-rate loan.

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

The agency says it paid $35 million in insurance claims in the third quarter, down 14 per cent from $41 million in the same period last year, due to a low national unemployment rate and low arrears rate. It says its arrears rate was 0.29 per cent for the quarter versus 0.3 per cent in the third quarter of 2017.

The agency's total insurance-in-force — the value of policies that are currently paid up — amounted to $453 billion in the quarter, down from $484 billion from the same period a year ago.

CMHC also declared a dividend of $1.17 billion payable to its shareholder, the government of Canada, payable Feb. 28. The amount includes for the first time $175 million from its securitization business. Dividends declared so far this year total $4.175 billion.

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