Broker: CMHC announcement could have been worse

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The CMHC announcement Friday that it is raising its premiums may have allowed brokers to sigh in relief; at least for one, who feared much more intrusive changes from the Crown Corporation.

“I thought it was going to be worse, quite frankly. I thought they were going to change some of the qualifications and that was way more of a concern,” John Van Driel of Mortgage Shopper told “In other words, (if they were) going to require a minimum of ten per cent down or fifteen per cent down but in this case it’s really nominal.”

The announcement surrounded the increase to CMHC-backed mortgage insurance, which is required of all homebuyers who front less than 20 per cent down. The average insurance increase, according to CMHC, will be 15 per cent for all loan to value ranges.

“The higher premiums reflect CMHC’s higher capital targets” said Steven Mennill, CMHC’s vice-president, insurance operations said in the official media release. “CMHC’s capital holdings reduce Canadian taxpayers’ exposure to the housing market and contribute to the long term stability of the financial system.”

Thankfully for brokers, Van Driel’s doesn’t see the change having much of an effect on brokers.

“If a mortgage premium is seven or eight thousand dollars it isn’t going to affect anything because it just gets added to the top of the mortgage and the monthly payment goes up five or ten bucks a month, that’s about it,” Van Driel said. “Brokers can pretty much ignore it. On an average home or an average mortgage it’s going to make a five or ten dollar difference.”

And when compared to other changes CMHC has made in the past, this latest is essentially inconsequential, according to Van Driel.

“Some of the other changes (over the last few years) were way more critical.”


CMHC announcement won't slow market
  • Omer Quenneville on 2014-03-03 2:00:50 PM

    It could have been worse but not less effective. Rather than raise the tax-premium they should have raised the required amount down from 5% to 6% or 7%. Then we would all be protected.

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