Thank you.
It's my pleasure to provide the committee with information on the activities of the Canada Mortgage and Housing Corporation this morning.
Most Canadians know us through our mortgage insurance business. Over the years, we've helped millions of people to obtain a mortgage, buy a home and benefit from lower financing costs. As you know, we compete in the marketplace with private insurers, but we do so with a clear public policy mandate.
In 2008, over 40% of our business assisted Canadians who live in areas or in certain types of housing that are less well-served by the private sector or not served at all. This includes homes in rural areas, northern Canada, and single-industry towns. In fact, CMHC is Canada's only provider of mortgage loan insurance for mobile homes and large rental projects, including nursing and retirement homes.
Even though the economic situation is contributing to a slowdown in the housing sector, Canada's system of home financing is continuing to operate. In many countries it has become very difficult for mortgage lenders to raise funds. This hasn't happened in Canada. This is partly because of CMHC's long-standing Canada mortgage bond, the CMB, and the NHA mortgaged-backed securities programs.
The popularity of CMHC's CMB and mortgage-backed securities programs increased as the liquidity crisis deepened. In 2008, $43.5 billion worth of CMBs were issued, in addition to $61 billion worth of NHA mortgage-backed securities.
A 2008 Program Evaluation concluded that CMHC's Canada Mortgage Bond Program played a stabilizing role in Canadian markets by providing a reliable and cost-effective source of funding for mortgages. The program also provided smaller lenders with funding options. This benefits consumers by promoting competition in the mortgage market.
The Government of Canada also took action recently by introducing the insured mortgage purchase program, also managed by CMHC. This program is providing further support to lenders. Under it, CMHC has purchased over $53 billion to date and can purchase up to $125 billion of insured mortgage pools. In fact another auction is being held today. This provides lenders with stable long-term financing and allows them to continue lending to Canadian consumers and businesses.
Another reason for the relative stability in Canada's mortgage system, especially compared to the United States, is that Canada has a history of prudent home financing. At the peak, in 2006, sub-prime lending represented about 40% of mortgage originations in the U.S. In Canada, sub-prime lending made up only 5% of mortgages. And compared to the types of exotic mortgage products offered in the U.S., it would be more accurate to refer to the Canadian sub-prime market as “near-prime”.
In our actions we're committed to sound risk management and prudent financial practices. We do not believe it is to anyone's benefit to put Canadians into homes they cannot afford.
The government, through CMHC, is also strengthening its commitment to assist those in need of affordable housing. In September 2008 the government committed more than $1.9 billion over the next five years for housing and homelessness programs.
Canada's Economic Action Plan builds on this with an additional one-time investment of more than $2 billion, over two years, in new and existing social housing.
The federal government currently spends $1.7 billion annually in support of approximately 630,000 social housing households. However, a considerable portion of this housing is getting older and is in need of major repairs and upgrading. The $2 billion investment in the action plan includes $1 billion for the renovation of this important national asset. It also includes significant funding for housing in first nations and northern communities, for seniors, and for persons with disabilities.
Canada's economic action plan also commits $2 billion for low-cost loans to municipalities to assist them in undertaking housing-related infrastructure. Municipal governments will be able to complete straightforward loan applications on CMHC's website and receive quick responses to their applications.
In closing, I want to assure the committee that in all of our activities, CMHC is committed to fulfilling its policy mandate while exercising prudent financial management and conducting proper due diligence.
I would like to thank the committee, and we would be pleased to answer your questions.
Thank you.