CMHC may want you to believe its latest price hike is minimal, but brokers aren’t convinced any increase is necessary.
“It’s just one after another. They’ve put it out as it’s just going to be another $5 per month, but it’s actually $1,000 they’d have to pay. They’re just nickel and diming (homebuyers),” Omer Quenneville, a broker with Centum, told MortgageBrokerNews.ca. “There were significant changes made last year. I don’t really see the need for this. I don’t hear about a lot of people being foreclosed upon.”
CMHC announced last week it is increasing its loan insurance premiums effective March 17.
“We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home,” said Steven Mennill, Senior Vice-President, Insurance at the time. “Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”
According to the Crown Corporation, the average homebuyer will see a $5 increase to their monthly mortgage payment as a result. However, buyers could pay up to nearly $16 per month more as a result. And that certainly adds up.
The hike has industry players – who are still grasping with the effects of last year’s sweeping mortgage rule changes – exasperated.
“I think it’s a needless increase. I think that we have this perception amongst regulators and politicians and laypeople that we have to slow down the market. The government has seen that it can use its ownership of CMHC can dictate policy. But I don’t see the justification for it,” Ajay Soni, president of the Mortgage Brokers Association of British Columbia, said.
“I don’t know if CMHC has ever taken a loss in the past and they are sitting on a massive reserve of funds. What’s disappointing is the government on one hand talks about housing affordability, and then they do nothing but increase the cost of housing for those who are trying to buy homes by jacking up fees.”