Canada's national housing agency says the 47 per cent decline in the country's insured mortgage market year-over-year in the third quarter is the "new normal level."

The Canada Mortgage and Housing Corp. says in its latest financial report that it provided mortgage loan insurance to 67,915 units for the three-month period ended Sept. 30 compared to 127,991 units during the same period a year ago.

Steve Mennill, CMHC's senior vice-president of insurance, says decreased volumes have been steady throughout the year as a result of the new regulations announced by the federal government in the fourth quarter of 2016.

The mortgage rules require all home buyers with less than a 20 per cent down payment to undergo a stress test to ensure the borrower can still service their loan should interest rates rise, or their personal finances fall. This cut into the purchasing power of some first-time homebuyers.

Mennill says CMHC is confident that the volume of insured mortgages the country is seeing now is the new normal level.

CMHC also says that it has seen an improvement in the quality of its mortgage loan insurance portfolio.

The agency says its overall arrears rate was 0.30 per cent in the third quarter, which is down from 0.32 per cent a year ago.