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Damage to Fort McMurray homes won’t impact CMHC’s finances, housing agency says

Canada’s national housing agency says it managed to ratchet down its exposure to the country’s mortgage market in the first quarter of the year.

The Canada Mortgage and Housing Corporation said Tuesday had $ 520 billion worth of mortgages on its books as of the end of March. That’s a slight reduction from $ 526 billion at the end of 2015.

By law, the CMHC can’t hold any more than $ 600 billion and last year the agency said it would take steps to reduce its exposure as it got near the threshold.

Anyone looking to buy a home in Canada with less than 20 per cent down must get CMHC insurance, which is paid for by the borrowers but pays out to the lender in case of default. All in all, the agency says 38.1 per cent of all outstanding Canadian mortgages had CMHC insurance on them at the end of March.

The average amount left on an insured mortgage is $ 238,632, the agency said.

Overall, the level of default remains low in Canada, with the percentage of borrowers who are in arrears on their mortgage — defined as being more than 90 days behind — holding steady at 0.34 per cent. But that figure has inched higher in Alberta and Saskatchewan, two regions hit hard by the commodity slowdown.

While most people seem to be staying on top of their mortgages, CMHC did say the amount it paid out in claims inched up during the quarter, to $ 102 million. That’s up by 13 per cent from $ 90 million during the same period in 2013.

The housing agency also noted the devastation related to the wildfires in Northern Alberta, but says it doesn’t expect the disaster to have a material impact on its finances.

“CMHC has provided lenders with a number of options to support CMHC-insured homeowners touched by these unfortunate events,” the housing agency said in a release.

The CMHC has calculated that is is on the hook for $ 259 million worth of mortgages on 647 properties in areas that have sustained serious fire damage. It also insures 8,770 mortgages in neighbouring properties that are believed to have sustained little or no damage. Those mortgages are insured on CMHC’s books for more than $ 3.7 billion.

“Claim losses to CMHC are not expected to be significant as lenders work directly with borrowers to address any required repairs, recoup losses under existing property insurance policies and access any disaster relief, emergency funds and/or other assistance as available and appropriate,” the CMHC said.

CBC | Business News