DBRS Morningstar Releases Commentary on Expected Market Share Increases for Private Mortgage Insurers

DBRS Morningstar released a commentary titled “Private Mortgage Insurers Expected to Gain Market Share While Maintaining Sound Underwriting Practices.”

The key highlights include:

-- Canada Mortgage and Housing Corporation’s (CMHC's) tightening of its underwriting guidelines can be expected to increase market share for its private sector competitors, who have not announced any changes to their underwriting practices. CMHC's changes to its underwriting criteria for insured mortgages include raising the minimum credit score and reducing the maximum threshold for the gross debt servicing (GDS) and total debt servicing (TDS) ratios.

-- The lowering of the GDS/TDS ratios is the most meaningful change, impacting approximately 20% of future borrowers, a large proportion of whom are located in pricier urban centres.

-- Private mortgage insurers are not necessarily taking on more risk, as they assess borrower quality using a variety of factors and adhere to the risk limits specified within their individual risk management frameworks.

-- The private mortgage insurers have demonstrated disciplined underwriting practices over the years, which is reflected in increasingly conservative insurance portfolios over the past decade.

Notes:
All figures are in Canadian dollars otherwise noted.

The commentary is available at www.dbrsmorningstar.com.

For more information on this industry, visit www.dbrsmorningstar.com or contact us at info@dbrsmorningstar.com.

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