On the surface, CMHC’s mortgage insurance arm had a stellar quarter. Net income for Mortgage Insurance hit $297 million, up massively from $182 million last year. The star performer? Multi-unit residential insurance. Insurance-in-force for this segment grew to $245 billion (from $213 billion at the end of 2024), and the Contractual Service Margin (CSM)—essentially the expected future profit on these policies—jumped to $3.78 billion.

This tells a clear story: demand for our product is robust. Despite a slight dip in insured multi-unit units (a trend towards smaller projects, as noted in the report), the dollar value of new business remains strong. The fundamental driver—Canada’s acute need for rental housing—isn’t going away.

The MICAT Elephant in the Room: Capital is About to Get More Expensive

This is the single most important takeaway for anyone in my world. Buried in the “Risk Management” section is a critical warning: “capital adequacy risk is high due to continued high multi-unit volumes and upcoming regulatory changes from the Mortgage Insurer Capital Adequacy Test (MICAT).”

Starting in January 2026, the new MICAT framework will “significantly impact capital requirements for our multi-unit insurance business.” In plain English, CMHC will have to hold more capital against the risks of insuring the very projects we’re building. This isn’t a surprise—they’ve been telegraphing it for a while—but seeing it stated so bluntly in the quarterly results makes it feel imminent.

We’ve already seen the first ripple effects. In July, CMHC updated its premium structure and rates for multi-unit insurance to “align with the revised multi-unit MICAT framework.” This is CMHC proactively managing its risk and profitability ahead of the new rules. For developers, it means the cost of CMHC insurance, a key component of project financing, is adjusting upwards to reflect the new risk reality.

Strategic Shifts: Where is CMHC Putting Its Money?

CMHC isn’t just sitting back. They are actively repositioning:

1. Capital Transfer: They explicitly state they will “transfer excess capital from our Securitization Activity to our Mortgage Insurance Activity in Q4 2025 and in subsequent years.” This is a clear signal that the mortgage insurance business, particularly for multi-unit, is the priority and needs fortification.
   
2. Dividends Suspended: Dividends to the government remain suspended. Every dollar of profit is being retained to build capital buffers for the upcoming MICAT change. This is a prudent but significant move that underscores the scale of the coming regulatory shift.

3. Investment Portfolio Overhaul: Their Mortgage Insurance arm is implementing a new Strategic Asset Allocation, reducing safe-but-low-yield Government of Canada bonds and adding exposure to corporate debt, provincial securities, and U.S. dollar securitized products. The goal? To generate higher investment returns to support the core insurance business without hurting regulatory capital. This is a more aggressive, sophisticated approach to managing their balance sheet.

The Silver Lining: Unprecedented Government Support

While the insurance side braces for change, the government’s commitment to boosting supply has never been clearer, with CMHC as the primary vehicle.

The Budget 2025 announcements are a game-changer for financing:

• The annual limit for Canada Mortgage Bonds (CMB) is being increased from $60 billion to $80 billion. This directly “unlock[s] more low-cost financing for multi-unit rental construction.”

• The government is also proposing to increase the guarantee limit for Securitization to a staggering $1 trillion.

For developers, this means the pipeline for low-cost construction financing, facilitated through CMHC’s securitization programs, is widening significantly. Programs like the Apartment Construction Loan Program (ACLP) are explicitly called out as being maintained, with its related cash reserves growing to over $1.1 billion.

The Bottom Line for Multifamily Players

What does this all mean for us?

1. Plan for Higher Insurance Costs: The era of steadily rising CMHC insurance premiums for multi-unit is here. Factor this into your pro formas for 2026 and beyond. The cost of capital is adjusting.

2. Financing is Flushing into the System: The expansion of the CMB program is a massive positive. The availability of debt capital for viable projects should remain strong, even as the cost of the insurance backing that debt creeps up.

3. CMHC is in a Balancing Act: They are walking a tightrope—managing robust growth in multi-unit insurance today while preparing for a more capital-intensive regulatory environment tomorrow. Their actions (premium hikes, capital transfers, dividend suspension) are all rational responses to this challenge.

In conclusion, the CMHC Q3 2025 report paints a picture of an organization and a market at an inflection point. The multifamily sector remains the cornerstone of Canada’s housing supply strategy, but the rules of the game are evolving.

For savvy developers and investors, understanding this shift, the interplay between rising insurance costs and expanding debt capacity, will be the key to navigating the opportunities ahead.

The message is clear: the business of building rental housing in Canada is being de-risked at a systemic level through government policy, but priced more accurately for risk at the project level. It’s a new equilibrium, and we all need to be ready for it.

James Fields is a real estate broker specializing in the acquisition and financing of multifamily assets across Canada.