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Mortgage Broker News | 25 Jan 2017, 08:15 AM Agree 0
CMHC may want you to believe its latest price hike is minimal, but brokers aren’t convinced any increase is necessary
  • Jennifer Coy (Invis) | 25 Jan 2017, 09:46 AM Agree 0
    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 some leadership.
  • Jason Nugent | 25 Jan 2017, 09:56 AM Agree 0
    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.
  • Aaron Phinney | 25 Jan 2017, 11:31 AM Agree 0
    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.
  • Omer Quenneville | 25 Jan 2017, 02:43 PM Agree 0
    CMHC should stop insuring collateral charge mortgages. If you have a collateral charge mortgage and you fall behind on your credit card, the lender can move the debt from the credit card over to your collateral charge mortgage and then it is covered under CMHC. This is not what the insurance was intended.
  • Jason Nugent | 25 Jan 2017, 03:53 PM Agree 0
    You're right Aaron, but just because they are profitable now, doesn't mean they will be in the future as they haven't always been. With higher housing prices, the chance of default is greater and the size of the loss is also drastically increased.
  • Nick Bachusky | 25 Jan 2017, 04:12 PM Agree 0
    Jason and Aaron, you are both right. I live in Ottawa and know many that work at CMHC. They have hired many people that do not get let go. They also offer very generous bonus structures to those up top. I think instead of just putting the onus on the Canadians looking to buy a home, they take a full look at their business and how it is ran. If they can provide a detailed, transparent report on this and prove without a doubt that these increases will prevent something catastrophic in the real estate sector in Canada, I will feel that these increases were justified.
  • Tony Piattelli | 25 Jan 2017, 05:01 PM Agree 0
    Using the 95% down category, CMHC presents this as only a $5 increase to the monthly payment and it's trivial. Ok, let's look at this another way. Premium increase from 3.6% to 4% represents an 11.11% percent increase in premiums. This represents 7.6% of the down payment, and an astonishing loss of equity for the home buyer of 24%. Going down the list as follows premium increase from 2.4% to 3.1% is a 29.16% increase cost, 1.8% to 2.8% represents a 55.56% increase in cost, 1.25% to 2.4% is a 92% increase and .75% to 1.7% represents 127% increase to costs. None of this is good for the buyer and any business that jacked their costs by this much would be crushed by social media, yet we just accept what CMHC is selling as gospel. This is being implemented in order to penalize the lenders for back end insuring low loan to value mortgages in order to sell them to the marketplace. The side effect will be a restricted secondary/renewal market thus limiting liquidity within the mortgage portfolio and locking clients to banks.
  • Ken Davenport | 25 Jan 2017, 06:07 PM Agree 0
    Based on their business from the first three quarters of 2016, CMHC's average premium went up just over 20%. This was even more than the 15% Genworth was lobbying for to offset their expected decline in new business volumes brought on by the new mortgage rules. Who needs to worry about cutting costs when the tax fairy will bail you out. As a wise man once said - Sad !
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