Calgary Alberta Mortgage and Real Estate News

Canada’s economy expanded for a fourth-straight month in January, led by a rebound in energy production.The economy grew 0.1 percent during the month, from a pace of 0.4 percent in December, Statistics Canada said today in Ottawa. Economists had forecast 0.2 percent growth, according to the median of 26 estimates in a Bloomberg News survey.

The Canadian dollar is poised for its biggest monthly gain since August, amid evidence the nation’s economy is rebounding from a fourth-quarter slowdown. Canada’s pace of expansion, at a three-year low of 1.4 percent in the fourth quarter, may have doubled that rate in the first quarter, economists say.

“Moderate further gains in February and March should give us a 3 percent rate for the first quarter,” said Ted Carmichael, chief Canadian economist for J.P. Morgan Securities Inc. in Toronto.

Investors and economists have been trimming bets for an interest-rate reduction. The yield on the banker’s acceptance contract due in September was trading at 4.31 percent in Montreal today, suggesting some investors are speculating the central bank will raise its 4.25 percent benchmark rate. That yield has risen from as low as 4.05 percent three weeks ago.

The Canadian dollar has gained 1.5 percent this month, trading at 86.71 U.S. cents at 11:06 a.m. in Toronto. The currency has gained 27 percent against the U.S. dollar over the past four years.

Job Gains

Canadian employers have added workers for six consecutive months, including more than 100,000 new jobs in the first two- months of this year, a trend that likely continued into March, according to a survey of economists by Bloomberg News. Canada’s March jobs report is scheduled for release on April 5.

The country’s core inflation rate, the measure most closely monitored by the Bank of Canada and which excludes volatile goods such as gasoline, rose 2.4 percent in February from a year ago, the fastest pace since March 2003, Statistics Canada said last week. The Bank of Canada, which has warned that the economy is at full capacity, sets borrowing costs to keep inflation at 2 percent, and the core rate has been at or above that target since July.

To be sure, the higher Canadian dollar and slowing U.S. growth continue to weigh on the nation’s economy. Factories cut production by 1 percent in January, led by a 12 percent decline by automakers, the statistics agency said today.

Activity by wholesalers and retailers also was tepid in January. Output generated by the nation’s wholesalers rose 0.1 percent, while retailers reduced by 0.2 percent, Statistics Canada said.

U.S. Housing

Bank of Canada Governor David Dodge said yesterday the U.S. housing market’s slump is lasting longer than the central bank had forecast. Canada sends more than 80 percent of its exports to the U.S., including lumber and other building supplies.

Still, construction, one of the main drivers of the nation’s expansion in recent years, remains buoyant, according to today’s report. Construction advanced for an eighth straight month, gaining 0.5 percent in January, today’s report said.

Energy companies, which generate 5.7 percent of the nation’s economic output and have been one of the main job creators in recent years, also rebounded in January with a 1.5 percent increase in production.

With the “economy operating at its capacity limits, core inflation running above target, and the economy likely to expand close to its potential rate in the first quarter, the odds remain heavily tilted towards the Bank remaining firmly on the sidelines,” Marc Levesque, chief economics strategist at TD Securities in Toronto, said in a note to investors.

Bank of Canada Governor David Dodge said on Thursday the central bank had been surprised by the rise in Canada’s core inflation to 2.4% in February from 2.1% in January, but cautioned against putting too much emphasis on data from one month.”Obviously it was more than most economists, including ourselves, were expecting,” said Dodge, who uses core inflation to guide the bank’s interest rate policy.

“There could well have been some special factors in that, and we’re going to have to evaluate, when we get a little more, whether there’s any change there or not,” he added.

He also told a news conference that the Bank of Canada did not see any extra stimulation from this month’s federal budget than what was originally envisaged in the bank’s forecasts.

The Canadian dollar edged
higher versus the U.S. currency on Friday, helped by stronger
oil and gold prices, while bonds rose alongside U.S.
treasuries.
 At 9:30 a.m. (1330 GMT), the currency was at C$1.1573 to
the U.S. dollar, or 86.41 U.S. cents, up from C$1.1582 to the
U.S. dollar, or 86.34 U.S. cents, at Thursday’s close.
 The currency eased on Thursday as it consolidated its
data-driven gains from earlier in the week, but traders
returned to the currency on Friday, helped by its commodity
profile.
 Oil prices, which have risen sharply this week, charged
above $62 per barrel on news Iran was holding British Navy
personnel after a boarding operation in Iraqi waters. Gold
prices were also stronger.
 ”There seemed to be a lot more European interest in the
overnight session. A lot of people seemed to be talking up the
fact that oil prices have rallied substantially over the last
couple of days,” said George Davis, chief currency strategist
at RBC Capital Markets.
 The Canadian dollar’s gains this week — including a
3-month high on Wednesday — have been due to much stronger
than expected domestic consumer inflation data coupled with
speculation that the U.S. Federal Reserve may cut rates later
this year.
 The currency is now up about 2.6 percent from 15-month lows
hit in early February.
 Davis said the currency is in a good position for further
gains, but that it could run into trouble if the U.S. economy
slows substantially, which would hurt demand for Canadian
products and pressure commodity prices.
 BONDS HIGHER
 Bond prices rose modestly alongside U.S. treasuries as the
market tried to get a sense of the rate outlook in both Canada
and the United States.
 The U.S. Federal Reserve said on Wednesday it was removing
its tightening bias, prompting some to speculate about rate
cuts, but those expectations subsided on Thursday.
 The Bank of Canada is seen by economists to be leaving
rates unchanged until late in the year, but predictions are
mixed as to whether the next move will be a rate hike or a rate
cut.
 The Bank of Canada’s overnight rate is 4.25 percent, while
the comparable U.S. fed funds rate is 5.25 percent.
 The two-year bond inched ahead 3 Canadian cents to C$99.58
to yield 3.945 percent, while the 10-year bond climbed 16
Canadian cents to C$99.31 to yield 4.090 percent.
 The yield spread between the two-year and 10-year bond
moved to 13.5 basis points, from 14.8 at the previous close.
 The 30-year bond gained 25 Canadian cents to C$124.60 to
yield 4.193 percent. In the United States, the 30-year treasury
yielded 4.168 percent.
 The three-month when-issued T-bill yielded 4.18 percent,
unchanged from the previous close.

All of your personal banking and credit card information, your birth date and your social security data are worth about $18 US on the Internet, according to a study released today.And much of that data may have been stolen from government offices, says the report by computer security firm Symantec Corp.

Symantec says thousands of Internet chatrooms and websites openly sell credit card and personal information for the purpose of identity theft — and are doing plenty of business.

Many of the sites can be found using the Internet Relay Chat program that is similar to MSN Messenger or AOL’s Instant Messenger software. Simply search for “cc” and hundreds of websites will pop up.

“I have valid CC (credit card) and bank loggins (sic),” bragged one person asking interested parties to contact him.

“Anyone interested in buying operative U.S.A., U.K. & Canada CC with billing info and CVV (a credit card security number): harvesting–tomyahoo.ca. Reasonable prices,” bragged another.

Symantec, the company responsible for the popular Norton Anti-Virus program, says it monitors many of these Internet properties to better understand the identity theft issue.

The findings are part of a 120-page semi-annual report on online security issues and threats. The report focuses on problems that emerged during the last six months of 2006.

“Bad guys have a tendency to want to brag a bit,” said Dean Turner, executive editor of the report. “All of the information we gather is in public Internet Relay Chat servers They are filled with lots and lots of people.”

An individual’s credit card information, by itself, will sell for between $1 U.S. and $6 U.S. on any of these chat rooms, according to Turner. An entire identity can be bought for as little as $14 US.

What could be even more disturbing is where the personal information comes from.

According to Symantec, governments were responsible for as much as 25 per cent of all leaked information that could be used by criminals to perpetrate identity fraud.

The second- and third-biggest contributors to data loss are the health-care industry (20 per cent) and educational institutions (14 per cent), Symantec says.

And most of the information isn’t going to hackers who break into government computer systems. Around 54 per cent of all data lost is just being carried out the door.

Hacking only comprises 13 per cent of the information that is being leaked.

“The major cause is theft or loss stealing hard drives out of machines,” said Turner. “Governments have a wealth of information on various groups and individuals.”

With new methods of data storage it’s easy for a person to walk into a government building and steal information, he said.

Thumb drives and MP3 players are capable of copying files, while computer terminals in unsecured locations can be pried open by a thief who steals the hard drive and all of the information on it.

He pointed to a 2003 incident in which a thief stole four Canada Revenue Agency computers containing confidential personal information on more than 120,000 citizens.

More recently, a doctor at Toronto’s Hospital for Sick Children lost a laptop containing the personal data of more than 2,900 patients in January.

The incident prompted Ontario’s privacy commissioner, Ann Cavoukian, to release guidelines requiring all personal data be encrypted before it is moved from an office setting.

“It is certainly something to be alarmed about,” said Turner.

What’s worse is that the amount of data loss may be even more profound. According to Turner, governments, health care and educational institutions are required by law to report data breaches publicly as soon as they occur.

The private sector is not bound by such rules.

“Look at the Winner’s situation, how much time elapsed between the time of that attack and the release of that data,” said Turner. “It’s quite disturbing and concerning.”

In February TJX Co., which operates Winners and Home Sense stores, announced that hackers had broken into its systems as far back as 2005 to steal credit card information of shoppers.

About the same time, police and the federal privacy commissioner announced they were investigating the disappearance of a computer hard drive containing the personal information in 470,000 CIBC Talvest Mutual Funds accounts.

In its report, Symantec urges governments and private businesses to require mandatory encryption of sensitive data. That way, even if the information is stolen, thieves won’t be able to access it.

While there are no statistics on identity fraud, credit card fraud accounts for more than $300 million in losses every year, according to recent statistics from Visa Canada.

To compile its report, Symantec used information it collected between July 1 and Dec. 31, 2006, from its offices in more than 180 countries and from some of the 120 million users of its security products.

Canada’s economic growth in the fourth quarter was the slowest in more than three years, as manufacturers sold their inventories to meet demand and consumer spending eased.Gross domestic product growth in the world’s eighth- largest economy eased to an annualized 1.4 percent rate between October and December, from a revised 2 percent pace in the third quarter, Statistics Canada said today in Ottawa. Economists predicted fourth-quarter growth would slow to 1.2 percent from an initially reported 1.7 percent rate, according to the median of 27 estimates in a Bloomberg News survey.

The Canadian economy experienced what Bank of Canada Governor David Dodge called a “mild” slowdown at the end of last year, caused by a strong currency and weaker U.S. demand. An anticipated turnaround this year may keep the central bank from lowering interest rates to bolster demand, economists say. The economy rebounded in December to grow at its fastest pace in a year, Statistics Canada also said today.

“We saw some weakness come through on the consumer side and we had some notable slowdown in some of the manufacturing categories” last year, Carolyn Kwan, an economist at Scotia Capital Inc. in Toronto, said before today’s report. “Our outlook is relatively positive” for coming months, she said.

The next decision for the central bank, which has left the benchmark lending rate at 4.25 percent since last May, is on March 6. Canadian interest-rate futures due in June show investors don’t expect a change in the 4.25 percent rate. The yield on the June bankers’ acceptance contract was 4.24 percent yesterday on the Montreal Exchange.

December GDP

On a monthly basis, the economy grew 0.4 percent in December, up from a revised pace of 0.3 percent in November. Economists had predicted output to grow 0.5 percent during the month, from initially reported November growth of 0.2 percent.

Canada’s economy grew 2.7 percent during all of 2006 from the previous year, below the 2.8 percent pace at which the central bank says the economy can grow without sparking inflation.

The central bank predicted in January that output would grow by 1.5 percent in the fourth-quarter and 2.7 percent for the whole year, down from a pace of 2.9 percent in 2005.

Consumer spending on goods and services, which makes up almost 60 percent of GDP, advanced at an annualized 3.1 percent rate between October and December, down from 5.1 percent in the third quarter. The central bank predicts consumer spending growth will wane in coming years, making up 60 percent of GDP growth in 2008, down from more than 80 percent in 2006.

Business Investment

Non-farm businesses drew down C$748 million ($636 million) in inventories during the quarter to meet demand, deducting almost a full percentage point from growth during the three-month period, the statistics agency said.

Investment by businesses, which includes spending on residential construction as well as machinery and equipment, advanced 3.9 percent, from the third quarter’s 3.2 percent annualized pace. Non-residential construction rose 10.5 percent, from 10.4 percent in the third quarter.

Exports rose 4.8 percent in the fourth quarter, while imports, a deduction from the GDP measures, declined 0.6 percent.

Government spending slowed to 1.8 percent in the fourth quarter, from 2 percent in the prior three months.

The Canadian dollar is moderately stronger Friday morning as it benefits from a bout of broadly based weakness in the U.S. dollar.

Canadian bonds are lower along with U.S. Treasurys after somewhat stronger-than-expected consumer price data in that country.

The U.S. dollar was trading at C$1.1744 at 9:54 a.m. EDT (1354 GMT), from C$1.1746 at 8:00 a.m. EDT (1200 GMT), and from C$1.1768 late Thursday.

With no Canadian data releases or other market-moving developments Friday morning, the impetus for the U.S. dollar’s decline against its Canadian counterpart come from the U.S. unit’s broad retreat in foreign exchange markets, analysts said.

“In terms of Canada, there’s really not to much happening today, with the data calendar being empty today,” said David Powell, currency analyst at IDEAGlobal in New York.

“Really, dollar/CAD is just being pressured by the across-the-board dollar losses, which are really the result of Asian reaction to negative U.S. news yesterday in the form of regional manufacturing surveys,” he said.

The U.S./Canadian dollar pair is likely to remain confined to established trading ranges in the near term, Powell said.

“I actually think that dollar/CAD is going to continue to be stuck in this range it’s been in,” he said.

On a longer-term view, the Canadian dollar is likely to appreciate, as the market is incorrectly pricing in an interest-rate easing from the Bank of Canada that is not consistent with the current economic environment in Canada, Powell said.

“It’s a bit too pessimistic on the Canadian interest rate picture in that growth is staring to pick up in Canada, as we’ve seen recently, and inflation is still a tick above the Bank of Canada’s target,” he said.

The medium term appreciation of the Canadian dollar will likely be more pronounced in cross treating against non-U.S. currencies, since markets are also incorrectly pricing in monetary easing in the U.S., he added.

On Monday, Canada’s federal government will release its budget for the 2007-08 fiscal year.

A report from RBC Capital Markets said it expects the budget to be mildly expansionary and to offer tax cuts and increase government spending.

“The Federal Budget is unlikely to impact USD/CAD significantly, although it could see BAX futures price out the interest rate cut that is partly discounted in 2007,” the report said.

The currency will also likely shrug off political risk stemming from a potential federal election and the Quebec election on March 26, the report said.

“Despite these risks, USD/CAD is more likely to be driven by the US slowdown and we continue to target 1.21 over the next 3 months,” the report said. “The Quebec Election on March 26 is shaping up to be a tight three-way race that could result in a minority Liberal government. But the result is unlikely to trigger an early Spring federal election,” it said.

“Technically, with an intermediate uptrend still in place, pullbacks to support at C$1.1590 and C$1.1427 are viewed as a new, optimal buying opportunity for an attempt at a more sustained break above C$1.1798,” it said.

Canadian bonds are lower along with U.S. Treasurys after news that the U.S. consumer price index edged up by 0.4%.

Economists had been expecting a 0.3% rise. The core CPI number, however, rose by 0.2%, as expected, after rising 0.3% last month.

The impact of the data was fairly mild, with U.S. Treasurys recovering some of the lost ground, and the Canadian bonds underperforming their U.S. counterparts somewhat.

The benchmark 10-year bond is yielding 4.04%, from 4.01% Thursday.

Real estate fraud is costing Canadians millions of dollars each year — perhaps even more than a billion — and becoming an “incredibly growing industry.”One of the country’s largest title insurers, First Canadian Title, says the upcoming busy real estate season in the spring can be a breeding ground for real estate scams, often averaging as much as $300,000 per case and industry estimates for how much real estate fraud costs Canadians range between $300-million and $1.5-billion each year.

On Thursday, First Canadian Title and the Consumers Council of Canada kicked off a public awareness campaign in Calgary warning homeowners of the growing danger. March is fraud prevention month across Canada.

Bill Huzar, president of the Consumers Council of Canada, said the real issue is there are so many different varieties of fraud but “this is one that is really hurtful because when the ordinary Canadian makes their biggest investment probably, the most expensive item they ever buy is their home.”

“The most difficult thing to understand is that people who are most at risk are people that have lived in their homes a long time, have increased equity because they’ve paid their mortgage down and now they’re feeling really good. And that’s the prime target,” said Huzar.

“It’s an incredibly growing industry.”

He said the risk is great in a real estate market such as Calgary’s, where the value of homes has risen so dramatically in the past year. As a homeowner’s equity has soared, so has the risk of becoming a victim of fraud, added Huzar.

Susan Lawrence, who was a victim of real estate fraud in Toronto, said police have told her this type of crime is easy and “is more lucrative and safer than dealing drugs.”

“The message is to be vigilant. Check your records. Check that you own your house,” said Lawrence. “If you’ve got any equity in it whatsoever, get title insurance because you won’t be stuck with legal bills of tens of thousands of dollars in fighting to get your house back.”

Lawrence put her house up for sale in the fall of 2005. Thieves stole the house in November and she discovered the theft in February, 2006. Thieves took out a fraudulent mortgage on her home for almost $300,000.

“A girl posed as me. Said she was selling the house. Sold it to another fraudster. The fraudster had all kinds of fake ID. … Then they went to the bank and got a mortgage for $300,000 and disappeared with the money,” she said.

Mortgage fraud occurs when individuals fabricate their qualifications to obtain a mortgage when buying a house. There is also mortgage fraud for profit, when someone intentionally defrauds a lender or a homeowner of their interest in a property through identity theft.

Ownership of a property is transferred fraudulently from the rightful owner to the criminal, who then sells or mortgages that interest and makes off with the funds.

Julia Jones, assistant vice-president, Western Region, First Canadian Title, said in 2006 the company started a process of underwriting title insurance policies to detect fraud in an attempt to prevent it.

“We prevented $20-million of suspected fraud, mortgages, and transactions in one year which involved 52 properties,” said Jones. “That gives you a pretty good idea that there is some serious concerns.

“As consumers, they need to protect their identity. That’s really important. … It’s important to do a credit search on yourself every once in awhile to make sure there’s no unusual activity. We recommend you even do a title search of your property from time to time to make sure there’s no unusual activity. And then, although title insurance doesn’t prevent fraud, it certainly can help you if you are a victim.”

The Canadian dollar rose
against the U.S. dollar on Monday following the release of
domestic labor productivity data that was stronger than
expected.

 Domestic bonds, with no major data to consider, managed to reclaim some of the sharp losses from Friday when strong data in both Canada and the United States eased expectations for interest rate cuts.
 At 9:30 a.m. (1330 GMT), the Canadian unit was at C$1.1702 to the U.S. dollar, or 85.46 U.S. cents, up from C$1.1723 to the U.S. dollar, or 85.30 U.S. cents, at Friday’s close.
 Canadian labor productivity growth matched the U.S. rate of 0.3 percent in the fourth quarter, Statistics Canada said, but for all of 2006 was just 1.2 percent, trailing the U.S. level of 1.7 percent.
 That helped support earlier gains made by the Canadian dollar as the U.S. unit was unable to extend the momentum from last week following a strong U.S. non-farm payrolls report.
 Also, comments from a European Central Bank official who said he could imagine raising rates to slow inflation even if that meant curbing economic growth appeared to weigh on the U.S. dollar and opened the door for gains in the Canadian unit.
 ”There were some hawkish comments coming out of ECB central bank officials that have kept the U.S. dollar on the defensive,” said Carolyn Kwan, markets economist at Scotia Capital. “But the Canadian dollar is actually underperforming against many of of the majors, mostly because of energy prices at this point.”
 The resource-linked Canadian dollar did not get any help from oil prices, which slipped below $60 a barrel amid expectations OPEC will not trim output and a view that oil supplies are plentiful in the United States.
 The remaining data due out this week, while not considered top-tier, could trigger moves in the Canadian dollar amid a dearth of other key events.
 Capacity utilization rates for the fourth quarter of 2006 are due out on Wednesday, while manufacturing shipments data for January will be released on Thursday.
 ”We’ve got … manufacturing shipments data to finish off the week so I think people are just looking ahead to see what happens with the data,” said Kwan.
 BONDS TILT HIGHER
 Canadian bonds recovered some of Friday’s data-related losses, when strong Canadian jobs numbers eased expectations for interest rate cuts.
 While Canadian economists have been forecasting no rate change by the Bank of Canada, bond prices have suggested the market is positioned for a cut around mid-year.
 However, some analysts said the recent steep declines in the equity market had inflated bond prices somewhat, making them an inaccurate gauge of the market’s rate expectations.
 ”People are sort of revisiting the movements from last week because there was a pretty significant selloff on Friday following the data,” said Kwan.
 ”I think it’s really just taking back a little bit of what happened on Friday but there’s nothing really fundamental to drive things this morning.”
 The two-year bond was up 2 Canadian cents at C$100.44 to yield 3.980 percent, while the 10-year bond rose 17 Canadian cents to C$99.81 to yield 4.025 percent.
 The yield spread between the two-year and 10-year bond moved to 4.5 basis points from 6.0 at the previous close.
 The 30-year bond rose 33 Canadian cents to C$126.40 to yield 4.097 percent. In the United States, the 30-year treasury yielded 4.699 percent.
 The three-month when-issued T-bill yielded 4.19 percent, down from 4.18 percent at the previous close.

Dollar/Canada encountered choppy trading for most of last week amid mixed data.  It then collapsed on Friday amid large demand for Canada/yen.

Canadian housing starts collapsed 21 percent in February to a seasonally adjusted annualized rate of 196,200 units from a revised 248,500 units in January.  However, new housing costs in Canada rose 0.3 percent in January.

The Purchasing Management index rose to 60.5 in February from 53.8 in January, according to the Ivey Purchasing Managers Index.

The trade surplus unexpectedly widened to C$6.35 billion in January, the largest since December 2005, from C$4.98 billion in December. Exports rose 0.9 percent, while imports dropped 2.9 percent.

Moreover, employers added 14,200 new jobs in February to the 88,900 jobs increase in January and this helped the jobless rate fall to 6.1 percent from the previous month’s 6.2 percent rate.  This is a three-decade low and was reached three times since May.

As universally expected, the Bank of Canada kept its main interest rate unchanged at 4.25 percent for a sixth meeting, the highest since August 2001, and 1 percentage point less than the Fed funds’ rate.

Canada Mortgage and Housing Corporation (CMHC) announced today that it will improve its mortgage loan insurance approval system, through a product enhancement called Self-Employed Simplified, to help more self-employed borrowers realize their dream of homeownership.“Self-Employed Simplified, will make it easier for certain self-employed borrowers to obtain mortgage loan insurance and, as a result, benefit from competitive interest rates,” said Pierre Serré, CMHC’s Vice-President, Insurance Product and Business Development. “This product enhancement will help self-employed borrowers and commissioned salespersons to obtain a CMHC-insured mortgage, much like borrowers who receive a salary or hourly wage from an employer.”

In recognition of the growing proportion of self-employed people in today’s workforce, CMHC has developed tools that help assess the risk associated with borrowers who have difficulty obtaining third-party validation of their income using traditional forms of documentation. Increasingly sophisticated risking models will enable the Corporation to launch this product enhancement effective March 30, 2007.

CMHC Self-Employed Simplified is designed for borrowers who have a minimum of two years in the same type of work and a proven track of responsibly managing their debt. CMHC Self-Employed Simplified will insure mortgages on one- or two-unit homeowner properties and will also be available for refinance transactions, for mortgages up to 90 per cent of a home’s value.

CMHC Self-Employed Simplified

Self-employed people represent a growing proportion of the Canadian workforce. CMHC’s Self-Employed Simplified product enhancement responds to this reality by making it easier for more self-employed borrowers to obtain CMHC mortgage loan insurance, and as a result to benefit from competitive interest rates.

CMHC already has mortgage loan insurance products for self-employed borrowers and commissioned salespersons who can provide traditional documentation to substantiate their income. These products will continue to be available.

CMHC Self-Employed Simplified will help more self-employed borrowers realize their dream of homeownership by making mortgage loan insurance available for borrowers who have difficulty obtaining third-party validation of their income through traditional forms of documentation. However, it will be limited to self-employed borrowers who have a proven track record of managing their debt, and who have worked a minimum of two years in the same type of work, either as an employee or self-employed.

CMHC System Enhancements

CMHC Self-Employed Simplified is possible due to enhancements to CMHC’s emili mortgage insurance approval system. These enhancements will include the use of new predictive models that assess the reasonableness of the income declared by the self-employed borrower. They will also allow for better assessment of mortgage default risk associated with self-employed borrowers who cannot provide traditional forms of documentation to substantiate their income.

The use of these models will help CMHC to insure these mortgage loans in a responsible and prudent manner.

Premium Levels

The CMHC Self-Employed Simplified mortgage insurance premium will vary from 0.8 per cent of the mortgage loan amount for loans with at least a 35 per cent down payment, to six per cent for loans with a 5 per cent down payment.  These levels reflect the absence of traditional forms of documentation to support the current income of the self-employed borrower.

While CMHC Self-Employed Simplified premiums are higher than those paid by borrowers with traditional forms of documentation, it is important to recognize that this product enhancement also allows borrowers to benefit from lower interest rates than would otherwise be the case.