CMHC, federal government not at odds over heated housing market

Last week, amidst the latest mortgage wars being waged by Canada's big banks, it was suggested the Canada Mortgage and Housing Corp. (CMHC) would make moves to cool this country's heated housing sector. As it turns out, that's not exactly the case.

The federal government seemingly has no appetite at present to tighten mortgage rules, preferring instead to let the market correct itself if it can. Ottawa has already tightened up mortgage insurance three times since 2008.

A Globe and Mail article published last week stated the CMHC would essentially make its own move to "dramatically curtail its growth in the mortgage market in the coming years in an effort to cool Canada's sizzling housing sector."

"There are no changes because we don't have the power to make any. Those changes usually come from the Department of Finance," explains Kate Munroe, spokesperson for the Ottawa-based CMHC. "All we did was publish our corporate plan for 2012-2016 and we do so every year. In this plan, there are some predictions for years to come."

Ottawa has set $600 billion as the limit for the amount of mortgage insurance CMHC can have outstanding, the Globe And Mail reports. The Crown agency cannot go beyond the limits set by the federal government.

"We have a limit of $600 billion set. We are not going to go over this limit for the next few years. The Globe And Mail article was not 100 per cent accurate unfortunately. We don't set any rules ... when it comes to mortgage insurance and rules, it's set by the Department of Finance."

Munroe goes on to insist the allocation of portfolio insurance the CMHC sells to banks doesn't impact the cost of purchasing a house.

"It has no affect on house prices or with people getting insurance from the CMHC when buying a home," she says.

Does Canada even have a housing bubble?

And according to a recently released fact sheet by the CMHC, there is no housing bubble in Canada. "The clear evidence of a bubble is lacking, but CMHC continues to monitor very closely housing prices and underlying factors such as demographic and economic fundamentals and financial conditions across all major urban centres, including condominium markets."

But, that leaves very little relief for home buyers looking to break into the market.

The MLS Home Price Index continued rising in February 2012, up 5.1 per cent from levels in February 2011, according to statistics released recently by The Canadian Real Estate Association (CREA). Year-over-year comparisons continued shrinking, providing further evidence that Canadian home price growth may be topping out.

"Trends for February show that home price growth is generally slowing," says Gary Morse, CREA president, in statement. "At the same time, price gains and trends differ among housing markets tracked by the index."

Among housing categories tracked by the CREA's index, single-family homes posted the biggest month-over-month gains in most markets, particularly in Toronto where they are in short supply relative to strong demand.