Flaherty regrets massive growth of CMHC, vows mortgage action if needed

“Finance Minister Jim Flaherty said Friday he regrets that Canada’s housing agency has grown as large as it has and promised to take additional measures if a reduction in the amount of government insurance on mortgages is needed.

The value of home loans insured by Canada Mortgage & Housing Corp., which is backed by the federal government, has almost doubled since the end of 2006, saddling taxpayers with a growing liability as policy makers warn that gains in house prices may be unsustainable.”

jim-flaherty

Reblogged from Bloomberg News

“Regrettably, CMHC became something rather more grand I think than it was intended to be,” Flaherty told reporters today in Markham, Ontario, near Toronto. “We’ll see over time what that role should be.”

CMHC, set up in 1946 to address a post-war housing shortage, had assets of $289 billion as of Sept. 30, which would make it the nation’s sixth-largest bank.

The Finance Department and financial regulators have taken steps over the past four years to curb mortgage lending. Most recently, CMHC announced Nov. 29 that the agency would be paying a “risk fee” of 3.25% to the federal government on the insurance it writes, starting Jan. 1.

While measures introduced last year by regulators and Flaherty slowed the market temporarily, home sales and values rebounded as the year progressed. The average sales price of a home sold in the country this year is up 4.6%, according to Nov. 15 Canadian Real Estate Association data.

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