Wednesday, October 22nd14.1°C
23840
22501

IMF advises Ottawa to trim CMHC's mortgage activities, then maybe phase it out

OTTAWA - The International Monetary Fund says the Canadian government should look for ways to clip the wings of Canada Mortgage and Housing Corp. and eventually get out of the mortgage insurance business altogether.

The Washington-based financial organization says in a working paper that government actions to cool Canada's hot housing have had some impact, but the market remains the single most important domestic risk to the economy.

Furthermore, it notes that if there is a crash, taxpayers would be left holding the bag because CMHC guarantees high-risk mortgage debt through government backing.

Ottawa should impose the same oversight on CMHC as it does private mortgage insurers and try to increase the private sector's participation in the market from the current level of about 25 per cent, the paper says.

Longer term, the IMF says the government should consider eliminating its role in the mortgage insurance business altogether, as Australia has done.

This is not the first time the IMF has urged Ottawa to trim CMHC's sails, and the government has done just that on several occasions, the most recent coming last month when the agency declared it would no longer insure second homes.

But the paper by economists Ivo Krznar and James Morsink, published earlier this week, hardens the IMF's stance toward the federal agency.

Former finance minister Jim Flaherty mused about winding down government participation in CMHC's mortgage insurance operations, noting that the agency had outgrown its original post-Second World War mandate to house veterans and promote home building. With a mortgage insurance portfolio of nearly $600 billion, CMHC is a major financial market player.

David Madani of Capital Economics, who believes Canada's housing market is poised for a major correction, said the IMF and the federal government are in sync about what should happen to the CMHC.

He says he expects Ottawa to keep imposing restrictions on its activities and may move to privatize it over the next decade.

The Canadian Press


Read more Business News

23658


Recent Trending




Today's Market
S&P TSX14547.71+209.94
S&P CDNX822.2810.93
DJIA16614.81215.14
Nasdaq4419.479+103.404
S&P 5001941.28+37.27
CDN Dollar0.8903-0.0006
Gold1249.30-2.3999
Oil81.97+0.01
Lumber329.70+0.10
Natural Gas3.699-0.012

 
Okanagan Companies
Pacific Safety0.100.00
Knighthawk0.01-0.005
QHR Technologies Inc1.17+0.05
Cantex0.055-0.025
Anavex Life Sciences0.192+0.001
Metalex Ventures0.045-0.005
Russel Metals33.09+0.81
Copper Mountain Mining2.17+0.18
Colorado Resources0.150.00
ReliaBrand Inc0.012+0.0009
Sunrise Resources Ltd0.060.00
Mission Ready Services0.46+0.01

 



23434

FEATURED Property
21028901317 Mountainview Street
5 bedrooms 2 baths
$469,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


Keep it rubber side down

This time of year, I always worry about which friends of mine will get caught going off the road in adverse weather conditions. With a little preparation most accidents can be avoided. Having won the...


Big bank predicts rate hike

Photo: Thinkstock.comThe end of record-low rates is nigh, according to one major bank, which has taken a stance and predicted when the Bank of Canada will raise its long-standing overnight rate. &ldq...


Experts share strategies in Kelowna

The third week in October is “Small Business Week”, a week dedicated to supporting local, small businesses. The week was designed to bring awareness to Canadians about the role small busin...

_








Member of BC Press Council


23691