CMHC increases mortgage insurance premiums

CMHC announced today it is increasing its loan insurance premiums effective March 17. This latest hike comes less than two years after the previous one, which took effect June 1, 2015.

The increase is the result of last year’s rule changes, claims CMHC. “Capital requirements are an important factor in determining mortgage insurance premiums. The changes reflect OSFI’s new capital requirements that came into effect on January 1st of this year that require mortgage insurers to hold additional capital. Capital holdings create a buffer against potential losses, helping to ensure the long-term stability of the financial system,” it said in its release.

Click here to read the full press release.

And what about the long-term stability of the financial system? It looks like this is the latest “tinkering” that continues to substitute for real effective change in how mortgage default insurance is practiced in Canada. Something I was writing about just last November. Click here to read the article is you missed it.

And please sign my petition for change: https://www.gopetition.com/petition/41858.html.

According to CMHC, the higher premiums are not expected to have a significant effect on home ownership affordability. The crown corporation estimates the average homebuyer will see a $5 increase to their monthly mortgage payment as a result. The table below shows the current and new premiums forthcoming:

Loan-to-Value Ratio Standard Premium (Current) Standard Premium (Effective March 17, 2017)
Up to and including 65%

0.60%

0.60%

Up to and including 75%

0.75%

1.70%

Up to and including 80%

1.25%

2.40%

Up to and including 85%

1.80%

2.80%

Up to and including 90%

2.40%

3.10%

Up to and including 95%

3.60%

4.00%

90.01% to 95% – Non-Traditional Down Payment

3.85%

4.50%

 

If I can help, let me know.

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