Canada Mortgage & Housing Corp Places Bullseye On Home Buyers
(April 04, 2015
)
It appears that the beurocrats at the CMHC are playing God with Canadian home buyers, especially those of meagre means. Buyers with less than 10% down when purchasing a property are about to face a hike in their mortgage default insurance, if they do business with the old Canada Mortgage and Housing Corp.
Also keep in mind that sources state the federal government has been "shopping" the CMHC for sometime now. It's about time the government was not in the mortgage and housing business.
“As a result of its annual review of its insurance products and capital requirements, CMHC is increasing its homeowner mortgage loan insurance premiums for homebuyers with less than a 10% down payment,” the Crown corporation said in a release.
Homeowners with less than a 20% downpayment must get mortgage insurance if they are borrowing from a financial institution regulated by the Bank Act. Buyers must also have at least 5% down. CMHC controls a majority of the market with private players Genworth and Canada Guaranty holding the rest.
This is not expected to have a material impact on housing markets.
The new rates go into effect June 1 and mean mortgage default payments for people with 10% down or less will increase by 15%. The premium in that category will rise to 3.6% of the value of the mortgage from 3.15% which CMHC says amounts to about $5 on a monthly mortgage.
“This is not expected to have a material impact on housing markets,” the Crown corporation said in its release. The changes do not apply to mortgages currently insured by CMHC.
“CMHC completed a detailed review of its mortgage loan insurance premiums and examined the performance of the various sub-segments of its portfolio,” Steven Mennill, senior vice-president, insurance, said in a release. “The premium increase for homebuyers with less than a 10% down payment reflects CMHC’s target capital requirements which were increased in mid-2014.”
The increase from CMHC follows increases the Crown corporation instituted last year, heading into the spring market. CMHC premiums jumped from 2.75% to 3.15% in 2014 and private players quickly followed.
Bejamin Tal, deputy chief economist with CIBC, said the fee hike does not come as a surprise. “They stated that they would like to have more ‘price to risk’ in the system and this move is consistent with it,” he said.
“As a result of its annual review of its insurance products and capital requirements, CMHC is increasing its homeowner mortgage loan insurance premiums for homebuyers with less than a 10% down payment,” the Crown corporation said in a release.
Homeowners with less than a 20% downpayment must get mortgage insurance if they are borrowing from a financial institution regulated by the Bank Act. Buyers must also have at least 5% down. CMHC controls a majority of the market with private players Genworth and Canada Guaranty holding the rest.
This is not expected to have a material impact on housing markets.
The new rates go into effect June 1 and mean mortgage default payments for people with 10% down or less will increase by 15%. The premium in that category will rise to 3.6% of the value of the mortgage from 3.15% which CMHC says amounts to about $5 on a monthly mortgage.
“This is not expected to have a material impact on housing markets,” the Crown corporation said in its release. The changes do not apply to mortgages currently insured by CMHC.
“CMHC completed a detailed review of its mortgage loan insurance premiums and examined the performance of the various sub-segments of its portfolio,” Steven Mennill, senior vice-president, insurance, said in a release. “The premium increase for homebuyers with less than a 10% down payment reflects CMHC’s target capital requirements which were increased in mid-2014.”
The increase from CMHC follows increases the Crown corporation instituted last year, heading into the spring market. CMHC premiums jumped from 2.75% to 3.15% in 2014 and private players quickly followed.
Bejamin Tal, deputy chief economist with CIBC, said the fee hike does not come as a surprise. “They stated that they would like to have more ‘price to risk’ in the system and this move is consistent with it,” he said.
Whatever direction you or anyone you know is moving in don't hesitate to call or email our team of real estate professionals at THE BC HOME HUNTER GROUP, 604-767-6736.
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