While the changes in mortgage laws enacted at the beginning of the year were designed to help improve the housing market and build up the economy, they also have had some undesirable negative consequences.


For many people, it has meant a major delay in their plans to purchase a home, being unable to meet the stipulated down payment requirements.  Housing prices and sales were in decline until just last month, and rental demand has increased greatly, without the infrastructure to support it.


Another area which has suffered is the Canada Mortgage and Housing Corporation (CMHC), a Crown corporation which is responsible for arranging mortgage insurance for homebuyers who are unable to meet the minimum 20% down payment. The tighter mortgage laws however, mean that there is a decreased demand for this core insurance product, forcing the CMHC to “shift gears” and adopt a new strategy for the services they offer.


From 2016 to 2017, the amount of insurance portfolios sold to banks in bulk fell by nearly 80%, while individual homeowner insurance volumes decreased by nearly 25%. This decreased demand highlights a need for a shift in focus for the corporation, as well as many other operations and businesses in homeowner insurance.


For example, some insurance professionals, and CMHC themselves are beginning to offer insurance packages for individuals purchasing or constructing apartment buildings containing five or more units.  These bulk insurance packages are aimed to encourage growth of rental properties in struggling markets, and also come at a more attractive price. Run as a commercial business, CMHC is very conscious of ensuring the pricing accounts for risk while still being reasonable.


In addition, CMHC is putting a lot of focus on growing the National Housing Strategy.  Launched in 2017, this ten-year program is aimed at increasing spending on social housing programs, with the goal of offering up to 100 000 new units for specifically selected groups, including veterans, mental health sufferers, seniors and many more. Despite already being involved in the project, this shift in focus will mean CMHC is contributing significantly more to the project than originally proposed.


From impacts on hopeful homeowners, to impacts on insurance providers, there is no question that the mortgage laws have had a dramatic impact on the housing market of the city.  But Toronto is resilient, and current evidence shows that they are forging on, shifting gears and staying on top.



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