Canadian private mortgage insurer Genworth MI Canada Inc. said Monday the company has no plans to tighten qualification rules for its borrowers, bucking a decision made last week by Canada Mortgage and Housing Corporation (CMHC).
Genworth said in a statement the company doesn’t plan to change any debt service ratio limits, minimum credit score and down payment requirements for homeowners looking to insure a mortgage with the firm.
Last week, CMHC unveiled a number of new rules aimed at tightening mortgage insurance eligibility for homeowners effective July 1. The new rules, which include raising the minimum credit score to 680 from the current 600 for at least one borrower and reducing the maximum gross debt service ratio, are aimed at protecting new buyers and taxpayers in the event of a market correction, while also curtailing excessive demand.
“Genworth Canada believes that its risk management framework, its dynamic underwriting policies and processes and its ongoing monitoring of conditions and market developments allow it to prudently adjudicate and manage its mortgage insurance exposure, including its exposure to this segment of borrowers with lower credit scores or higher debt service ratios,” said Stuart Levings, chief executive officer at Genworth, in a statement.
CMHC’s decision to tighten mortgage insurance rules has been criticized by some economists, who see the new eligibility requirements as “poorly timed” given that Canada remains in a period of economic need due to COVID-19.
Last month, CMHC said that Canadian home prices could fall by as much as 18 per cent this year if Canada’s economy doesn’t fully recover from the economic shock brought forth by COVID-19.