CMHC says high-risk loans — where homes are almost underwater — more than doubled in 2022

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CMHC says high-risk loans — where homes are almost underwater — more than doubled in 2022
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Canadian Mortgage and Housing Corp. said that the loan-to-value ratio, which measures the amount of a loan against the value of the mortgage holder’s home, in its highest reported category more than doubled to 2.8 per cent in the third quarter of 2022.

One of the country’s main mortgage insurers reported that its proportion of high-risk loans more than doubled in 2022., which measures the amount of a loan against the value of the mortgage holder’s home, in its highest reported category more than doubled to 2.8 per cent in the third quarter of 2022. That category, with LTV ratios of more than 95 per cent, now represents an outstanding insured mortgage balance of $5 billion.

“Historically, the percentage of loans with LTV over 95 per cent was very low, and so did not seem to warrant reporting loans over 100 per cent,” said Claudie Chabot, a CMHC spokesperson. If the ratio is pushed to 95 per cent, it’s “not the end of the world,” said Zlatkin, because there’s still equity in the home. “The bigger deal is people approaching 100 per cent because then you have no equity in your home,” she said. “The bank has all the equity.”

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