The Canada Mortgage and Housing Corporation (CMHC) have announced that it is increasing its mortgage loan insurance premiums for investors who will hold between one and four rental units.
The hike, estimated at 15 per cent for all loan-to-value ranges, will also apply to owner occupied and self-employed homeowners. The controversial move - which will come into effect on May 1 - does not apply to mortgages currently insured by the CMHC.
“The higher premiums reflect CMHC’s higher capital targets” said Steven Mennill, CMHC’s Vice-President, Insurance Operations. “CMHC’s capital holdings reduce Canadian taxpayers’ exposure to the housing market and contribute to the long term stability of the financial system.”
According to the CMHC, for the average Canadian homebuyer requiring CMHC insured financing, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment.
As expected, other mortgage insurance companies followed suit. Genworth Canada announced on Monday that it was also raising its rates on May 1.
"We believe this new pricing is prudent and more reflective of increased regulatory capital requirements," says Brian Hurley, Genworth Canada chairman and CEO. "These pricing actions are supportive of the long-term safety and stability of the Canadian housing market."
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