CMHC announces higher premiums for risky loans

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The Canada Mortgage and Housing Corporation has announced that it is increasing premiums for high-risk mortgages. Buyers with less than a 10 per cent downpayment will pay approximately 15 per cent more for their mortgage loan insurance from June 1, 2015. The hike follows the agency’s review of its products as it looks to boost its capital reserves but it says the increase will only add around $5 to a typical monthly mortgage payment. For that reason it says it is not expected to have a material impact on the housing market. For those borrowing 90 per cent or more of the home’s value there will be no change at all; the rate for borrowing 90.01 to 95 per cent will rise from 3.35 per cent to 3.85 per cent. 
 
  • Chad on 2015-04-06 7:43:04 AM

    Interesting they take the top end where clients have no choice. If this was really about cash they could have added it to the bulk insurance side.

  • Amber on 2015-04-06 10:58:27 AM

    The clients that work hard to save their 5% down and lets be honest that with price increases that is higher and higher for a home they are now giving up almost their entire equity they thought they would have in their home to mortgage lenders insurance. We don't have a high foreclosure rate in Canada so is CMHC becoming another way for the govt to increase revenues?

  • Jim Bob on 2015-04-06 11:52:57 AM

    I don't to mean to be cynical but the writing is on the wall. Slowly but surely the government is engineering its market slow down (soft landing) by putting pressure on affordability for first time homebuyers. Resellers and move up buyers are going to feel this too since first time homebuyers are the drivers of entry level homes.... It will flow upward just watch. In addition to the CMHC premium increase announced today property and casualty insurers are apparently raising premiums on condos which are typically purchased by first time homebuyers. Next will be an increase in the cost of bulk insurance which will effect lender margins thereby forcing a slight mortgage interest rate increase. I hope I am wrong about this one.

  • Ron Butler on 2015-04-06 12:32:36 PM

    I really don't think increased CMHC premiums slow down a market. If people believe the price of houses is going straight up they don't worry too much about the CMHC premium; which it too bad because a high premium represents money that is gone forever from the consumer's pocket no matter what happens with housing prices.

  • MaryAnn on 2015-04-06 7:14:05 PM

    Just more gouging!

  • Jesse D on 2015-04-06 8:48:04 PM

    One word...Genworth
    CMHC is yesterday, forget them and go with Genworth and CG.

  • Ron Price/DLC on 2015-04-07 8:26:36 AM

    With current low default rates, it is disappointing that Genworth did not, for once, establish a price differential with CMHC. They could have and should have such that the market would then choose a private sector insurer over government. Yes this is price gouging at it's worst, especially when one compares Canadian mortgage default insurance premiums to American where the latter only pay a 'slice' annually as opposed to 100% up front Canadian. Compared to our American neighbours, we continue to get shafted big time since our maximum mortgage term is 10 years versus 30 years. Because of this Canadians are much more exposed to rate increases. Oh Canada, what a shame. Why can't our source of funds provide the same duration as the U.S.A.?

  • Steve on 2015-04-07 11:12:00 AM

    Thanks CMHC and Genworth for making it harder for first time homebuyers. Why not have a higher premium only for non-first time buyers thus allowing for the first timers to get into the market?

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