CMHC announces higher premiums for risky loans

CMHC announces higher premiums for risky loans

CMHC announces higher premiums for risky loans 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. 
 
8 Comments
  • Chad 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.
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  • Amber 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?
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  • Jim Bob 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.
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