The Canadian housing market broke sales and price records in July as it continued to catch up after the spring closings.
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But CMHC said the economic shock from the pandemic has yet to be fully reflected in the latest housing market data, predicting that the COVID-19 containment process could still pose a risk to prices, sales and new construction projects.
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“Although it will take several months for the economic impacts of COVID-19 to fully materialize, some factors are starting to be reflected in our financial results – for example, we are starting to see the impacts in our insurance claims reserves, “Lisa Williams, CMHC’s chief financial officer, said in a statement on the company’s second quarter financial results.
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CMHC reports net income of $ 566 million for the three months ending June 30, compared to $ 379 million for the same period last year, with an arrears rate of 0.34%.
As CMHC took over new government programs and funding, it also saw claims costs climb $ 256 million, or 711%, due to increased provisions for COVID-19 claims. , including the outlook for mortgages currently on hold.
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CMHC purchased $ 5.8 billion in insured mortgage pools this year under a government program and also administers Canada’s emergency commercial rent assistance program for small businesses.
CHMC’s upcoming report will also show the impact of its stricter underwriting criteria, which, effective July 1, tightened credit ratings and down payment requirements for insured mortgages.
The company also said it had suspended dividends to save money in the event that further government action was required.
“We remain in a strong financial position to withstand the full effects of COVID-19 and to take additional steps to support Canadians and the economic recovery if needed,” Williams said.
© 2020 The Canadian Press