Wednesday, 26 February 2014

Some Thoughts on What CMHC May Announce on Friday

As CMT noted, “CMHC will be making an announcement Friday at 11:00 A.M. EST. They’ve notified reporters well in advance, which is somewhat unusual.”

I agree that it is somewhat alarming that CMHC has summoned the media for this “announcement”. In the past, Flaherty has been the one announcing mortgage rule changes. However, right now Flaherty is in Australia for G20 Summit.

This could mean:
1. CMHC will announce low-impact news 
(eg raise insurance premium, tighten debt serice ratio etc), not important enough to require Flaherty to be the one giving the speech. However, if this is simply a low-impact announcement, why make the unusual move to summon the media well in advance and then delay the announcement from Thursday to Friday?

2. CMHC will announce moderate-impact news
possibly mortgage rule changes. These “mod-impact news” may very well directly impact the public (eg down-payment requirement) rather than some internal bank rules that the public don’t quite get, that’s why they’re requesting media presence to give the reporters a chance to ask questions on behalf of the broad public. (I doubt CMHC would’ve summoned media just to tell them they’re tightening MBS)
Why do they pick a time when Flaherty is out of the country to do this? Perhaps the new CMHC leadership and recently appointed Board want to make their faces seen in public, an attempt to salvage their public image by appearing like they’re “proactively making changes to reduce tax-payer risk”.

3. CMHC will announce high-impact news. 
Potential impact (& public backlash) is so high that they had to time the announcement to After the Budget, and During the time when Flaherty is out of the country, so that Flaherty could later say “look, I wasn’t even in the country when this happened!”  ;)


On separate (but not sure if related) note,

"RBC has just eliminated all of its advertised “special offer” rates today" (first reported by @CdnMortgageNews )

eg. on its website, there is no longer any “discounted rate” of 5Y 3.49% Fixed mortgages, just the “posted rate” of 5Y 5.14% Fixed mortgages.

(Sure, this could be just RBC updating its computer database to prepare for their next promotion, but this timing is interesting a day or two before the CMHC announcement)

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