Level of Canadians' indebtedness is chief worry: CMHC head

CMHC president and CEO Evan Siddall says he worries that the debt load being carried by Canadians means we have "straitjacketed ourselves."

Housing agency top exec says CMHC comfortable with situation at Home Capital

CMHC president Evan Siddall says the debt load many Canadians carry increases vulnerability to economic shocks. (Nathan Denette/Canadian Press)

The level of debt Canadians carry is the main worry for the head of the Canada Mortgage and Housing Corporation.

In an interview Thursday with Peter Armstrong, host of CBC News Networks'  On the Money, CMHC president and CEO Evan Siddall said he worries that debt load means we have "straitjacketed ourselves."

"We have fewer degrees of freedom, because we have more household debt, and that means we are more vulnerable to all sorts of things, whether they're domestic or off-shore, as far as shocks go, and that hurts all of us," Siddall said.

The head of the country's housing agency also addressed the situation at alternative mortgage lender Home Capital, which is the subject of an Ontario Securities Commission case and has seen clients pulling money out of deposit accounts that the company uses to fund its mortgage lending. 

Siddall said CMHC has been keeping an eye on Home Capital for a while.

"We're actually quite comfortable with Home's situation right now, quite comfortable," he said. "We don't think we have a lot of exposure, and we're keeping an eye on it."

Asked about calls for federal intervention in Home Capital, Siddall said he thinks the first move is for the market.

"If the market can resolve things, that is better," he said.

There have already been signs that federal involvement in the market may be having an effect. Earlier this week, CMHC reported a steep decline in the number of home buyers who qualified for mortgage insurance under tougher rules implemented last fall. In its quarterly financial results posted Tuesday, the housing agency said that it insured just over 48,000 new mortgages between January and March, a 41 per cent decline from the previous three-month period.

The figures cover the first full quarter since Ottawa changed the mortgage rules last October. Among the new rules is a requirement that borrowers pass a "stress test" to gauge their ability to pay back the loan if mortgage rates were to rise.

The International Monetary Fund said Wednesday it would like to see more tightening by the federal government as the global body called the housing market overheated in parts of Canada.

Siddall said there are many markets across the country to deal with when drawing up housing strategy — the hot ones, the cold ones, and those in between.

He said the housing agency is currently involved in discussions with the provinces, municipalities and other stakeholders about plans for the federal government's $5-billion national housing fund.

Details of that housing strategy will be released by Minister of Families, Children and Social Development Jean-Yves Duclos in the fall, Siddall said.