Mortgage Insurance and Real Estate Returns: A North American Perspective

摘要

This article explains the link between mortgages insured by government agencies and the underlying house price, in both Canada and the United States of America (USA). Overall, American states with fewer insured mortgages relative to all mortgages originated experience a larger real estate price decline during an economic downturn despite a lower concentration of risky consumers in those areas. Canadian mortgage insurance data is virtually unavailable although over 50 percent of all residential mortgages are insured in Canada. Canadian insurance data, provided by the Canadian Mortgage and Housing Corporation (CMHC), is sparse and does not allow for as in-depth of an analysis of mortgage insurance in the Canadian market versus that of the USA. Proposed regulations will make mortgage insurance harder to obtain and may actually strengthen the Canadian real estate market. Unfortunately, the CMHC has refused to release valuable mortgage insurance data and a thorough analysis cannot be conducted.