CMHC insurance increases not as "insignificant' as believed

CMHC insurance increases not as "insignificant' as believed

CMHC insurance increases not as "insignificant The Canada Mortgage and Housing Corp. announced it will increase insurance premiums for those homeowners with less than 10 per cent down and players expect the move to impact one type of client in particular.

“CMHC completed a detailed review of its mortgage loan insurance premiums and examined the performance of the various sub-segments of its portfolio,” said Steven Mennill, CMHC’s senior vice president of insurance. “The premium increase for homebuyers with less than a 10 per cent down payment reflects CMHC’s target capital requirements which were increased in mid-2014.”

This is the second such move in two years, as CMHC hiked its premiums from 2.75 per cent to 3.15 per cent last year.

Effective June 1, the insurance premium will rise 45 basis points to 3.6 per cent for those mortgages with less than a 10 per cent down payment. The housing authority said the move, announced late last week, will only add about $5 per monthly payment.

As such, CHMC said it does not expect the increase to have a material impact on the housing market.

But that is not a sentiment that’s shared across the country.

“It most certainly will; especially first-time homebuyers,” says Ron Hollett, an agent in Dartmouth, N.S. “When it’s your first time buying a home, you’re trying to save every dollar and then there are more fees.”

Hollett says the increased insurance rate will then have a domino effect on the market, making it more difficult for homeowners to sell and move up.

For now, though, he’s telling his clients to work hard to make the down-payment cut-off and realize the benefits of homeownership.

“If they can do it, go without the CMHC fees,” he says. “See if they can get money from another source, like family. Never the less, we’ll have to work with (the fee increases).”
20 Comments
  • Omer Quenneville 2015-04-06 12:13:39 PM
    More should be done to help those high-risk buyers into the market instead of making it harder. We either help people get into homes now or we will pay later when they retire without the benefit of a home to aid in their retirement.
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  • Old Broker 2015-04-06 12:20:25 PM
    If a client is that tight and cannot afford an extra few dollars a month for their mortgage why are they purchasing. Gas prices will certainly eat up more than that every month. How about one less pack of cigarettes or 2 4 of beer every month. Let's get real about the complaints here guys. The reply to put more down payment makes no sense. Where is the money to come from if $5 month affects a purchase so drastically. Time for a reality check.
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  • Omer Quenneville 2015-04-06 12:26:52 PM
    Its not the $5, it is another $5 and so on and so on. Do you now realize how tight they have shut the door on those that need housing opportunities most while keeping the door open for speculators and investors. Home ownership should be treated more like a right instead of a privilege. And for you to imply that the low end market is full of smokers and drinkers is just so wrong. Pay now or pay later... think about it.
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