Move should solidify the Crown corporation's funding in the event of future difficult decisions
Canada Mortgage and Housing Corporation (CMHC) has announced that it is temporarily suspending dividend payments amid the coronavirus pandemic.
According to CMHC’s Board of Directors, the decision is part of its suite of measures aimed at supporting home owners, multi-unit borrowers, and housing providers during these troubled times.
“Temporarily suspending the dividend is a prudent measure that allows us to conserve capital to support Canadians and the economic recovery through the crisis should the need arise. As a key stabilizing component of the Canadian financial system, we will be substantially increasing our appetite for risk as we and other institutions absorb the impacts of these events,” the announcement stated.
“At December 31, 2019, our capital position remains strong with approximately $3 billion in excess capital for our mortgage insurance and mortgage funding activities. Temporarily suspending our dividend allows us to conserve our financial strength to take further action, if needed,” the corporation added.
In a separate announcement, CMHC outlined the expansion of its Insured Mortgage Purchase Program (IMPP), which will help offset some of the economic disruptions stemming from the COVID-19 outbreak.
“This action will expand the stable funding available to banks and mortgage lenders in order to ensure continued lending to Canadian consumers and businesses.”
CMHC said that it is ready to purchase an additional $100 billion of insured mortgage pools. The Crown corporation noted that this will be in addition to its $50-billion commitment announced mid-March.
