CHMC Increasing Mortgage Insurance PremiumsPublished: January 17, 2017
CMHC Mortgage Insurance Premiums to increase…
Canada Mortgage and Housing Corporation (CMHC) is increasing mortgage insurance premiums. The new CMHC rates will apply to any buyer applying for a CMHC insured mortgage as of March 17, 2017. Existing mortgages and renewals will not be impacted.
CMHC reviews its rates annually.This increase has been sparked by several factors. First, a tightening of the qualifying process announced in October 2016 by the Federal Government. For highlights see our blog, Tougher Rules for Insured Mortgages in Canada. Second, the Office of the Superintendent of Financial Institution’s (OSFI) new capital requirements that as of January 1, 2017 Canada’s mortgage insurers (CMHC, Genworth Financial Canada, and Canada Guaranty) hold additional capital to buffer against potential losses.
We suspect that the BC Provincial Government’s offering of second mortgages to assist first time home buyers with their down payments also played a part. Read more about this date announcement in our blog, BC Housing Action Plan.
CMHC anticipates the increase to the average borrower’s monthly payment will be around $5/month. However, the rate actually increases the more money you apply to your down payment. Yes, you read that right. Read CMHC’s full report with the backgrounder, CMHC to Increase Mortgages Insurance Premiums.
Confused? Make sure you check with your Mortgage Broker or give us a call to discuss your real estate needs!
For Your Interest: During the first 9 months of 2016, nearly 50% of CHMC’s transactions were for mortgage loans of less than $300,000. And, nearly 95% of CMHC transactional mortgage loans were for less than $600,000.
Update, January 18, 2017: Genworth has followed CMHC with increased rates for mortgage insurance to reflect the new regulatory capital framework for mortgage insurers.