The CRA has shared highlights from its industry consultation on the government's new Income Verification Tool.

It promises to use the broker and lender feedback it received to "inform" its design of the tool, citing two stats as reasons to complete this project:

1. Mortgage Professionals Canada warns that “for every $1 lost to fraud it takes $4 for lenders to recoup.”
2. "The foreclosure process on a property where the borrower is unable to make their payments can take up to a year, and cost approximately 20% to 30% of the property’s value," it says.

The agency declined to ballpark when the tool might come to fruition—classic government strategy: if you don’t give a timeline, you can’t miss it.

Findings from the report

International markets inflated Canadian bond yields on Monday, and the trend heading into Tuesday's CPI remains up.

Meanwhile, with yields making new medium-term highs on Monday, multiple lenders announced fixed-rate hikes.

Macro bulls got some revenge Friday, a headline jobs number worth printing on a T-shirt. And, no matter how the deniers spin it, this report was a market sentiment shifter.

There are surprises, and then there are data releases that slap economists harder than a red wine hangover. This was the latter.

Canada’s 5-year yield drifted higher on Thursday, but that was before America's trade agitator threatened Canada at 8:15 p.m. ET with a new tariff.

Demand for CMHC's multi-unit mortgage insurance skyrocketed 28.7% last year.

Borrowers and lenders have increasingly relied on it to buy, build or refinance multi-unit rental properties.

Unlike uninsured mortgages, CMHC multi-unit financing allows:

• lower down payments
• lower interest expense (lower rates)
• easier debt servicing, thanks to stretched-out amortizations

Take a $15.6 million, 48-unit construction loan under MLI Select, for example. A qualified insured borrower can save ~12% on the monthly payment and buy with $3 million less down, versus a conventional mortgage.

In 2024 alone, CMHC's multi-product helped fund 283,000 housing units. That makes it pivotal to the Carney government’s housing supply dreams.

The challenge is that CMHC is the only game in town for insured multi-unit financing. That's why the price it charges for insurance premiums is so impactful.

And now, those premiums are going up, in some cases, a lot.

Unfortunately—and God bless them—CMHC's specialty is not providing simple, straightforward, and comprehensive explanations of its commercial policy changes. It would be swell if they created a side-by-side before-and-after comparison of each change—you know, to help people understand this stuff. But alas, we ask too much.

What's changing

Starting on July 14:

• NEW: CMHC is standardizing the pricing for all multi-unit (MU) insurance products, including MLI Select. Fewer pricing tables to confuse customers are a good thing.
• NEW: A new premium discount schedule for MLI Select applications will take effect. The purpose: to lower premiums "based on the level of social outcomes achieved by the borrower, such as affordability, accessibility, or energy efficiency," CMHC says.
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• NEW: Premiums are heading higher for CMHC’s standard ("Market") insurance for retirement homes, student housing, single room occupancy and supportive housing, says Nadeem Keshavjee, President, Founder at GreenBirch Capital.
  • Fortunately, there are effectively no changes to premiums for CMHC's "Market" insurance for standard rental housing.
• NEW: MLI Select is getting pricier for those pushing the LTV and amortization envelope. Here's the upcoming pricing:

We're talking some hefty price hikes here, my friends. MLI Select premiums prior to the change "ranged from [only] 2.55% to 4.05% regardless of the leverage or amortization," Keshavjee says. (See this)

For non-standard housing (e.g., student rentals at 85% LTV, the purchase premium goes from 6.10% to 7.75%, he adds.

• As for current premium surcharges, they'll remain unchanged in all cases. Just note, however, that CMHC never used to levy a premium surcharge for extending MLI Select amortizations beyond 25 years. Now it does. So if you want a 40-year amortization, that's another 75 bps on top of the MLI Select premiums in the above table.
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Breaking it down

Wednesday was a peaceful day on the Canadian macro front, but falling U.S. rates proved once again that Canadian bonds are easily distracted by shiny American objects.

Here's what swayed Canada's fixed-rate leading 5-year yield on Tuesday, and in which direction...