Auto Loan: CMHC is forecasting a decline in defaults

Canada auto loan and Housing Corporation (CMHC ) expects that the amounts of outstanding auto loans decreased this year compared to 2013.

The outstanding CMHC insurance totaled $ 557.1 billion last year.

In its annual report released Monday , CMHC said it expected that this amount decreases to $ 544.8 billion in 2014 , which would be its lowest level since 2010.

The total outstanding insurance CMHC can not exceed $ 600 billion.

The agency is the largest insurer of residential auto loans in the country.

In order to strengthen the residential auto loan market, CMHC introduced last month changes that make it more difficult for some Canadians to obtain financing guaranteed by the government.

As of May 30 , CMHC will most purchases self-employed without income verification by a third party , and it will no longer offer insurance to Canadians wishing to purchase a second home .

The increases announced earlier this year by CMHC rates came into effect last week , increasing by an average of 15 percent amounts that the company asks for a auto loan.

Financial institutions usually require auto loan insurance buyers making a down payment of less than 20 percent. The insurance protects the lender against default , but the costs are usually paid by borrowers.

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