The new CMHC premium hike for default insurance – coming into effect this Thursday, May 1 – is unfair to those who want to make a profitable business, argues one investor.
The controversial mortgage insurance hikes will hurt investor bottom lines and could potentially put a dent in some portfolio plans.
Speaking to MortgagBrokerNews.ca's sister publication CREW, investor Sahil Jaggi says mortgage insurance companies should not be “lumping” all property owners in the one group.
“It is a little added cost that I feel, as an investor, is obviously a little pinching,” he says. “If the government can see if a person has more than 50 per cent in most of his properties, and has decent income, certainly the CMHC rate should be a little more lenient for those investors as opposed to people who have a bad record.”
The Canada Mortgage and Housing Corporation (CMHC) announced in February that it would increase its mortgage loan insurance premiums for investors who hold between one and four rental units.
The hike, averaging at 15 per cent for all loan-to-value ranges, also applies to owner occupied and self-employed homeowners. Genworth also announced its rate hike at the same time.
Jaggi says that the premiums should be implemented on a case-by-case basis. “If they do it this way, they will be able to encourage investors who are maintaining their portfolios at a very safe and cautious way already.”