A more volatile housing market has made itself felt in the Crown corporation's latest results
Economic turbulence, high interest rates, and elevated household debt have led to a noticeable decline in home sales during the first part of the year, in turn impacting the Q1 financial results of Canada Mortgage and Housing Corporation (CMHC).
The Crown corporation’s Q1 net income was $331 million, down from $345 million during the same period last year.
“This is mainly due to a decrease in insurance service results, which were partially offset by higher net interest income and investment income from higher interest rates,” CMHC said in its Q1 2023 Quarterly Financial Report released earlier this week.
The national mortgage arrears rate ticked up from 0.27% in Q1 2022 to 0.28% this year.
Total equity increased by 2% annually ($190 million) largely due to comprehensive income of $585 million partially offset by $395 million of dividends declared this year. Total assets increased by 2% ($7.204 billion) primarily due to an increase in loans as new issuances of CMB program loans exceeded maturities.
“Higher house prices, increased borrowing costs, inflation, and elevated levels of household debt have made home ownership less affordable,” CMHC said. “This has resulted in lower transactional homeowner unit volumes consistent with decreases in MLS sales relative to the same quarter in 2022.”
However, despite the significant effect of current economic conditions, CMHC chief financial officer Michel Tremblay said that the Crown corporation remains “in a strong position to withstand further economic volatility and continue to uphold stability in the financial system by providing support for Canadians in housing need through our programs.”
