CMHC plans to increase its mortgage loan insurance premiums, effective May 1, 2014.
The changes come after the organization’s annual review of its insurance products and capital requirements. It says the increases will apply to the premiums paid for owner-occupied, self-employed and one to four unit rental properties.
Also, the changes will affect low-ratio refinance premiums but won’t apply to mortgages currently insured by CMHC.
“The higher premiums reflect CMHC’s higher capital targets,” says Steven Mennill, CMHC’s vice president of Insurance Operations. “CMHC’s capital holdings reduce Canadian taxpayers’ exposure to the housing market and they also contribute to the long term stability of the financial system.”
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. This isn’t expected to have a material impact on the housing market.
Starting May 1, 2014, CMHC Purchase (owner-occupied, one to four unit) mortgage insurance premiums will increase by approximately 15%, on average, for all loan-to-value ranges.
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