Bloomberg News

Genworth Says Vancouver, Toronto Homes May See Correction

February 03, 2012

(Adds company comments from second paragraph.)

Feb. 3 (Bloomberg) -- High-end housing markets in Toronto and Vancouver may see corrections, said Stuart Levings, chief risk officer at Genworth MI Canada Inc., a mortgage insurer.

“We do believe the market is somewhat overvalued in certain regions, particularly at the high-end segments of Vancouver and Toronto,” Levings said today on a conference call to discuss quarterly results. “We expect these segments may see some correction over the next 12 to 18 months.”

Genworth said yesterday fourth-quarter profit fell 7 percent to C$79 million ($79.4 million), or 80 cents a share, from C$85 million, or 80 cents in the year-earlier period.

Canadian housing demand has softened, and low interest rates have helped to partially offset decreasing affordability, according to the Oakville, Ontario-based insurer.

Demand will remain “subdued” this year, and mortgage originations will be little changed or “slightly down” in 2012, Levings said. Home prices will be little changed in the next 12 to 18 months, followed by marginal growth after that, he said.

“We do not see an abrupt correction, but more of a soft landing, which bodes well for the long-term health of the market as a whole,” Levings said.

Genworth’s chief executive officer Brian Hurley also said that the company won’t be affected by government limits on the amount of mortgage insurance that can be provided.

“We have lots of room for new business,” Hurley said. “Capacity will not be an issue for us for this year, or going into 2013.”

Canada Mortgage & Housing Corp. said Jan. 31 it is rationing mortgage insurance for lenders as the government’s housing agency approaches the legal limit for its ability to backstop loans.

--Editors: Paul Badertscher, Jacqueline Thorpe

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editor responsible for this story: David Scanlan at dscanlan@bloomberg.net


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