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