CMHC releases results for Q2 2023

Ottawa, August 29, 2023

With increasing demand for rental housing, Canada Mortgage and Housing Corporation (CMHC), the country’s only provider of mortgage loan insurance for multi-unit residential properties, has seen an increased demand for multi-unit insurance products. As home builders work hard to supply Canada’s rental markets, CMHC has seen its insured volumes, in dollars, for these products rise 45% year over year to $12,319 million in Q2 2023, significantly higher than the $8,483 million in Q2 2022. This growth is further outlined in CMHC’s most recent Quarterly Financial Report, released today.

With continued growth forecast in rental housing demand, CMHC continues to forecast growth in its multi-unit loan insurance. To further support the growth and sustainability of Canada’s purpose-built rental supply and conserve capital for underwriting the development of this much needed housing type, CMHC is temporarily decreasing overall dividend payments to our shareholder, the Government of Canada. Compared to recent dividend payments, the temporary reduction represents $250 million for this last quarter.

As a Crown Corporation, CMHC has commercial, profit-generating operations like its mortgage insurance business. This is in addition to its public mandate to deliver housing programs on behalf of and with funding from the Government of Canada. Since CMHC started paying dividends in 2017, it has declared and paid $18.9 billion to the Government of Canada. This includes $790 million paid to date in 2023.

Quote:

“While our current capital position remains strong, decreasing our overall dividend payments allows us to continue to grow our multi-unit insurance business. As Canada's only provider of mortgage loan insurance for multi-unit residential properties, our insurance facilitates access to preferred interest rates lowering borrowing costs for the construction, purchase and refinance of multi-unit residential properties and facilitates renewals throughout the life of the mortgage. Additional incentives are available to support affordable rental housing projects.”
— Michel Tremblay, Chief Financial Officer and Senior Vice-President, Corporate Services

Additional highlights for the three-month period ending June 30, 2023:

Net income for Q2 was $303 million, down from $335 million in Q2 2022. This is mainly due to losses on financial instruments as we had lower borrowings at below market rates which leads to gains at the time of borrowing as well as losses on housing loans issued below market value as we issued more loans in Q2 2023. This was partially offset by higher investment and interest income due to the higher interest rates and an increase in guarantee fees earned in the Mortgage Funding Activity due to price increases in recent years.
Government funding has increased in Q2 2023 as compared to Q2 2022 driven by additional activity for the National Housing Co-Investment Fund, Rapid Housing Initiative and from the One-time-top-up to the Canada Housing Benefit.
In the first half of 2023, housing activity increased, but it remains below the historic price peak seen in early 2022. MLS^® sales were 438,838 units (seasonally adjusted and annualized rate, SAAR) decreased 24% in the first six months of 2023 relative to the same period in 2022.
Higher house prices and mortgage rates have resulted in lower transactional homeowner unit mortgage insurance volumes which are down 37% in this quarter relative to the same quarter in 2022* consistent with the decreases in MLS^® sales.
The national mortgage arrears rate for our mortgage loan insurance remained stable at 0.25%.
Mortgage arrears remain low at 3,660 compared to 3,911 in Q2, 2022, which is resulting in low levels of claims paid.
We guaranteed $36 billion of National Housing Act Mortgage-Backed Securities and $11 billion of Canada Mortgage bonds that serve to provide low-cost funding and financial stability.
On January 1, 2023, we adopted IFRS 17 Insurance contracts (IFRS 17) as issued by the International Accounting Standards Board for the first time. We have applied IFRS 17 retrospectively and have restated our 2022 comparative results. This has had a significant impact on our financial results as further discussed in the quarterly financial report.

* 2022 results have been restated for impacts of IFRS 17

Q2 Highlights	Three months ended 30 June 2023	Year-to-date June 30, 2023
Net income ($M)	303	634
Government funding ($M)	563	2,699
New securities guaranteed ($B)	47	90
Insured volumes (units): Transactional homeowner insurance	13,741	20,831
Insured volumes (units): Portfolio insurance	4,718	8,381
Insured volumes (units): Multi-unit residential insurance	60,408	104,976

Capital management	As at 30 June 2023
Total Mortgage Insurance capital ($B)	9.7
Mortgage Insurance capital available to minimum capital required (%)	172%
Total Mortgage Funding capital available ($B)	1.4
Economic capital available to capital required (Mortgage Funding) (%)	113%
Insurance-in-force ($B)	403
Guarantees-in-force ($B)	488
Canadian residential mortgages with CMHC insurance coverage (%)	19.1%
National mortgage arrears rate (%)	0.25%

The full Quarterly Financial Report is available online.

CMHC continues to deliver the National Housing Strategy (NHS), a 10-year initiative with investments of more than $82 billion, giving more Canadians a place to call home. The NHS covers the entire housing continuum, from shelters and transitional housing to community and affordable housing, to market rental and homeownership. CMHC reports progress on the achievement of NHS targets quarterly online.

CMHC supports the housing market and financial system stability by providing support for Canadians in housing need, and by offering housing research and advice to all levels of government, consumers and the housing industry in Canada. Follow us on Twitter, YouTube, LinkedIn, Facebook and Instagram.