CMHC is expected to make an announcement at 11:00am eastern time, on Friday, February 28, 2014.
The media (Globe and Mail) suspects it will be to announce that mortgage insurance premiums will be increasing.
This will have the effect giving people a disincentive to make low down payments (or use extended mortgage terms) and also conveniently allow CMHC to accrue even higher amounts of unearned premiums when they sell mortgage insurance policies.
Since the other two mortgage insurers in Canada (including Genworth MI (TSX: MIC)) mirror the CMHC rates, any increase in CMHC rates would have a proportionate impact on their top-line revenues going forward. CMHC is one of the Government of Canada’s best performing crown corporations, with a comprehensive income of $1.3 billion for the first 9 months in 2009.
The market anticipates a positive announcement, given that the pending news release was announced after the close of February 26, 2014 trading:
Genworth MI continues to be a significant component of my portfolio so I am watching this like a hawk. I have no idea what the announcement is going to be.
My views on Genworth equity has been very well documented on this site since I took a position in them in July 2012.