CMHC says it can withstand a severe shock as it passes stress test scenarios

OTTAWA — Canada Mortgage and Housing Corp. says stress testing has confirmed its mortgage loan insurance and securitization businesses are able to withstand a severe shock.

The housing agency tested the strength of its businesses against several extreme scenarios.

It looked at the impact of an earthquake in a major urban centre, a steep drop in the price of oil and a U.S.-style housing correction where unemployment rises along with a fall in house prices of 30 per cent.

CMHC also examined an anti-globalization scenario that included a rise in protectionism, widespread use of tariffs and a euro-zone break-up.

The agency began publicly releasing its stress test results in 2015.

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CMHC provides mortgage loan insurance for home buyers as well as securitization guarantee programs to help financial institutions.

The Canadian Press