BMO Capital Markets put out a recent report that underlined that point. Since 1979, loan losses on uninsured mortgages have averaged a paltry 2-3 basis points, notes author John Reucassel. That’s just $20-30 per $100,000 of mortgages.
Even during the 1990 recession, uninsured mortgage losses topped out at 6 bps. (The peak was in the early 80s when credit losses hit 12 basis points.)
You’d expect insured mortgages to be more risky, but from a loss standpoint, CMHC’s losses have averaged a very reasonable 9 bps over time. In the big scheme of things, 9 bps is small potatoes.Remember that CMHC charges borrowers up to 275 basis points (of their principal) on a typical insured mortgage