A mortgage broker told me that right now, people have huge debt load but extremely high credit scores because they can rob Peter to pay Paul-in other words, they can make their payments for now, just can't qualify for more mortgage$ at a Bank- have to go the secondary route.
Also, @CMHC_ca and @GenworthCanada claim the average credit scores of the borrowers they insure is 750-800- at one time, these companies insured the bank against default for "riskier" mortgages- bruised credit (620 min), <20% down.
The fall off in real estate volume is probably more related to consumers who have credit scores of less than 720- because CMHC and Genworth really aren't offering risk related "default" insurance anymore- they're just adding a Government guarantee to the Banks mortgage books.
The secondary lending market is at a higher interest rate that makes buying a first home or moving up too costly. If they're locked into a mortgage now, there's discharge fees + they need 20% down- which many, even move up buyers don't have, they can't move if they wanted to.
