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On a 90- to 95-per-cent loan, homeowners saw fees rise to 4.5 per cent, up from 3.85 per cent. It’s still unclear whether this had much impact on the market but it bolstered CMHC’s bottom line to the point where it will be able to pay the federal government a special dividend of $4 billion over the next two years.

The premium rate charged by CMHC is one area where the government could take action by ensuring the Crown corporation charges just enough to cover its costs and risks, without penalizing first-time homebuyers, who are currently subsidizing government spending.

More likely, that revenue will be eyed a source of funds for more social housing spending in the new plan.

A look at mortgage arrears over the past quarter century suggests the risks — viewed by policy-makers through the lens of the 5-per-cent default rate in the U.S. during the financial crisis — are, in any case, greatly overstated.

Canada’s arrears rate rose to 1.02 per cent in 1983, when interest rates were around 20 per cent. Since then, it has run at around half of one per cent.

Ottawa’s most direct lever on housing demand is control of mortgage rules that stipulate the minimum downpayment on purchases; equity requirements for re-financing and maximum amortization periods.

Finance minister Bill Morneau has already used this mechanism to try to curb the market and there is speculation he may do so again.

We are a long way from the heady days of 2007, when buyers were allowed to buy a house with zero down and an amortization period of up to 40 years. Further tightening could block entry to the housing market at all for some first time buyers and the authors recommend Morneau stays his hand for now.