The Board of Directors of Canada Mortgage and Housing Corporation (CMHC) approved a special dividend payment of $3.5 billion and a regular dividend payment of $395 million to its shareholder, the Government of Canada.
The special dividend is a one-time payment of excess capital consisting of $2.25 billion from Mortgage Insurance and $1.25 billion from Mortgage Funding. This is in addition to our base quarterly dividend of $250 million from Mortgage Insurance and $145 million from Mortgage Funding. The dividend is payable by April 30, 2021.
By returning these funds, the Government of Canada can use them to support Canadians where it is needed most in these difficult times. We will continue to do our part through, our various programs, to ease the unequal burden of high house prices and the pandemic, while continuing to support Canada’s financial stability through the crisis.
A year ago, we took the prudent action of suspending the dividend to support government crisis actions and to absorb some economic downturn and uncertainty resulting from the pandemic. With the impacts of the pandemic clearer and a revised economic outlook, it is the appropriate time to re-instate the dividend.
The dividend strikes the right balance between returning some excess capital to the Government of Canada and retaining sufficient capital to protect against a housing market downturn and other factors that could impact our business. Our stress testing, published earlier this year, provides insights into alternative negative scenarios and indicates we have sufficient capital to reinstate the dividend, while conserving enough capital to sustain extremely severe downturns.
Strong risk management and financial stewardship come from making choices. By returning excess capital to our shareholder, we reinforce our discipline to do our very best work for Canadians.
In doing so, we will move closer to our aspiration that “by 2030, everyone in Canada has a home that they can afford and that meets their needs.”