Mortgage insurance premiums hiked once again

CMHC announced early Tuesday it is increasing its loan insurance premiums effective March 17.

“We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home,” said Steven Mennill, Senior Vice-President, Insurance. “Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”

According to the Crown Corporation, the average homebuyer will see a $5 increase to their monthly mortgage payment as a result. That $5 certainly adds up, however, to a total of $1,500 over the course of a 25 year mortgage.

The increase is the result of last year’s mortgage rule changes, CMHC claims.

“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,” it said in a release.

“Capital holdings create a buffer against potential losses, helping to ensure the long term stability of the financial system.”




This latest hike comes less than two years after the most previous one, which was announced in April 2015.

See below for standard premium changes.


 

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COMMENTS

  • by Dizzy 2017-01-17 10:34:17 AM

    In other words CMHC is padding their cash reserves so they will not loose money on predicted future defaults. So they make bad investments and then make other people pay for them. Nice deal eh!

  • by Howard 2017-01-17 12:24:47 PM

    The payment chart is confusing . Why does the effect on payment get higher in the tables as the amount of mortgage is getting lower ? Should be the other way around or?

  • by Kiki Berg 2017-01-17 12:27:09 PM

    What will be the premium for the Non-Traditional Downpayment with this new First TIme buyer Mortgage helper program? Hmmm. This program gets MORE expensive by the minute.

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