yes indeedy............but I meant we as in Mooseland cos I'm here

http://www.housingwire.com/news/fha-...-critical-mass

Thanks Steve, that was actually a very interesting article.

By pure coincidence, The Economist (arguably one of the most respected financial newspapers in the world) has just published an article on the Canadian housing market. And I quote:

"Some say that Canada’s banks are flattered by a huge indemnity offered by Canada Mortgage and Housing Corp (CMHC), a public institution that insures mortgages with a loan-to-value ratio of more than 80%. CHMC’s book grew to C$567 billion ($557 billion) in 2011, up from C$345 billion four years earlier. And Canada’s housing market looks very frothy on some measures: The Economist’s analysis of price-to-rent ratios suggests that Canadian properties were about 75% above their long-run “fair value” in the first quarter of 2012 (see chart). Although less than 0.5% of CHMC’s mortgages are in arrears, such exuberance is a worry. The central bank recently labelled housing as “the most important domestic risk to financial stability in Canada”."

http://www.economist.com/node/21557731

Ok, I'm downing my spade now, as requested. All's well, nothing to see here.

But at the end of the day, that's the way the cookie crumbles in Canada, you either accept it and purchase a home, rent, or stay put.

Not quite. It's the cost to the taxpayer I object to, in case CMHC needs to be bailed out.

I haven't read this whole thread but why would CMHC need to be bailed out? It's self financing.

Not read the whole thread either - only this last page. But to answer your question CMHC is self financing, but is ultimately underwritten by tax payers if they have insufficient funds to make payouts. It's unlikely, but not actually impossible that they will need a bailout if enough people default on their mortgages.

welcome back honey, where have you been?

Firstly, waves hello to Alan.

For anyone to answer really - is the CMHC unwritten by taxpayers in law and writing and how it was set up, or is it sort of underwritten by taxpayers in a "we might bail you out" kind of way ?

The former. Every single company that is too big to fail is underwritten in a "we might bail you out" kind of way. If the country risks going tits up because of my demise, you can bet that government money/guarantees will follow.

Note that the chance of the government bailing *me* out are somewhat slim

It seems to have worked for some time though. The alternative, is for no such policy to be in place and to let the "market" decide. One wonders how many would qualify for mortgages then. Is that what you would prefer?

Just FYI, mortgage insurance for less than 20% down has been around at least in the US for decades.

That should make everyone feel better

Pete

It's not that fewer people would qualify for mortgages. People would still qualify, just for lower amounts.

Less money available to spend means decreased demand for homes. Decreased demand means lower prices. Lower prices mean people can buy the same house for less money.

In the end, it only matters how much money you have compared to *other people*. If you're in the bottom 10% bracket, then look for a house with a price in the bottom 10%.

Inflating the amount of money available to spend on a house for everyone (which is what the CMHC does, in the end) serves no purpose, except for keeping the economy going at the expense of creating a bubble. A bubble which will cost the tax payer dearly, when it pops.

Speaking of the US.. how many Canadians would be under water if the housing market here did a USA?

And not everyone is involved in the CHMC anyway, a lot of people try and save enough deposit to not have to pay the premium in the first place, and therefore aren't involved in it in any way and not at risk to the CHMC premiums.