Genworth MI Canada is positive on Canadian Real Estate Market

 Finally, a positive media report in the same Globe & Mail newspaper who gave us “Five Reasons Why Not to Buy a Condominium” 

Sean Silcoff http://tiny.cc/5mujsw reported last week on a recent report issued by Genworth MI Canada, Canada’s largest private mortgage insurer second only to CMHC.  Although its business has dropped by 5.43% year over year in its fourth quarter, Genworth, which has 30% of the mortgage insurance market, is comfortable with the current real estate market.  At worst, Canada is going to see a modest slowdown in the real estate market, consistent with the “soft landing” predicted by other industry experts.  Genworth is unique in that it has the ability to assess the quality of its borrowers, review the values of its mortgages and the rate of delinquencies.  In all 3 categories, Genworth had positive numbers.  Its loss ratio of 31% was far better than its target of 35-40%.  Its delinquent mortgages fell to 1.4% per thousand, down from 1.47% in the third quarter and 2.02% in the year earlier quarter.  Their stock is up 45% since post-2009. 

CEO, Brian Hurley, told analysts that “overall borrower quality has improved for the market” in part due to tightening of insurance rules.  He went on to say “these home buyers are well positioned to stay in their homes when we encounter an increasing rate environment”.

So why are we in a housing bubble?  Are we going through a housing crash as predicted by McLean’s and Canadian Business?  Or is it really that we are going through a slowdown in an industry that had experienced tremendous growth in Canada and substantially, in urban centres like Montreal, Toronto and Vancouver?  Genworth is satisfied with the quality of its borrowers who have solid equity, and merely forecasts some minor bumps in the Canadian housing.  A very reassuring message that we should send to the rest of the fear mongering media.