Unnecessary CMHC hike just ‘nickel and diming’: Broker

Unnecessary CMHC hike just ‘nickel and diming’: Broker

Unnecessary CMHC hike just ‘nickel and diming’: Broker 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.”


 
8 Comments
  • Jennifer Coy (Invis) 2017-01-25 9:46:38 AM
    We have known for a while that CMHC does not want to be in the mortgage insurance business. But instead of withdrawing, they continue to increase premiums, keeping average Canadians struggling to build lasting equity. We have to hope that Genworth and CG will have enough forethought not to blindly follow in this path...show some leadership.
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  • Jason Nugent 2017-01-25 9:56:15 AM
    I'm not saying I'm agreeing with the increase, but you do have to take a stop back and look at the big picture. The gov't has cut CMHC off at the knees. They took away the extremely profitable low risk refinance business and has left them with high risk high ratio mortgage business. So revenue was cut in half and risk has doubled. The only option I can see is to raise premiums. But that's just my perspective.
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  • Aaron Phinney 2017-01-25 11:31:32 AM
    Jason, that's exactly the issue with CMHC... profits. CMHC was created to help Canadians afford housing. Their mandate is to provide risk insurance for lenders, resulting in lower interest rates and down payment requirements.
    As a government entity, that remains their supposed focus. Profits are not supposed to be the driving force, unless claims outweigh profits, which they don't.
    They claim the increase in rate is to increase their holdings to ensure sufficient coverage for payouts. Given that the CMHC Arrears Rate for Q2 2016 (last report provided) was 0.32%, I'd suggest that they have more than sufficient money in their accounts to cover any losses...
    They increase their rates because they can, and Canadians are required to pay it, not because they have to.
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