CMHC/Genworth/Canada Guaranty Increases Their Premium AGAIN
If you’re in the market for an insured mortgage, then you might want to get that mortgage before March 17.
Canada Mortgage and Housing Corporation (CMHC) is raising premiums for insuring mortgages on Canadian homes for the third time in three years. Canadian homebuyers are required to have mortgage insurance if they have less than a 20 per cent down payment. The insurance provides protection for the lender in the case of a default.
How will it hit your wallet? The increase is not too significant for those making the minimum down payment required. A homebuyer with a $250,000 mortgage and a 5 per cent down payment will pay about $5 per month more in insurance premiums.
The increases are actually more substantial for larger down payments of 15 per cent or more. Those with 20 per cent or more down payment aren’t required to have mortgage insurance, although it’s used by lenders that securitize their mortgages. As a result, any increased cost will likely be passed on to customers through higher rates.
Premiums are also increasing for “non-traditional” insured mortgages i.e. home buyers with borrowed down payments, a type of mortgage down payment that could grow in popularity as homebuyers strive to gain entry in the housing market.
The premium change will come into effect on March 17. Homebuyers will be able to access the current lower rates if they have bought a home and are approved before the March 17 deadline, even if they have a later closing date.
Standard Premiums Premium New Premiums
Up to and including 65% 0.60% 0.60%
up to and including 75% 1.70% 5.90%
up to and including 80% 2.40% 6.05%
up to and including 85% 2.80% 6.20%
up to and including 90% 3.20% 6.25%
up to and including 95%:
Traditional equity 4.00% 6.30%
non traditional equity 4.50% 6.60%