Insurance / Lenders

New Mortgage Insurance Premiums Announced – Again!

January 17, 2017 brought the announcement of new mortgage insurance premiums to take effect on March 17, 2017. 

This is the 7th set of changes since 2008. These new premiums will affect both CMHC and Genworth NEWLY insured mortgages.

Special Note: These new changes affect homebuyers obtaining a new mortgage only. Homeowners with an existing mortgage or those renewing existing mortgages are not affected.

Why

The reason provided by CMHC’s Steven Mennill, Senior Vice-President, Insurance is ‘Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.’

Simplified, that means they need to increase premiums to increase capital, to cover potential losses associated with higher risks.

Now what does this mean to a typical borrower? 

The typical insured mortgage borrower will experience a $5-$30 increase to their monthly mortgage payment with the higher insurance premiums. 

Down payment between 10% and 14.99%

Loan Amount

$150,000

$250,000

$350,000

$450,000

$550,000

$850,000

Increase to Monthly Mortgage Payment

$4.94

$8.23

$11.52

$14.81

$18.10

$27.98

Based on a 5 year term @ 2.94% and a 25 year amortization

How can you avoid being affected by these premium changes? 

There are two ways you can avoid being affected by this new change;

1. Do not get an insured mortgage- by having at least 20% downpayment and/or not purchasing a unique property/location that requires mortgage insurance.

2. The other way is to get an unconditional approval for a purchase from both a lender and the insurance company prior to the March 17th implementation date.

For more information on reasoning behind the decision, and the perspective of other industry professionals, check out these articles:

https://www.cmhc-schl.gc.ca/en/corp/nero/nere/2017/2017-01-17-0830.cfm

http://www.cbc.ca/news/business/cmhc-mortgage-insurance-1.3938943

If you have any questions about these changes, or mortgages in general, call Jackie the Mortgagegirl. 

Send your friends too as referrals are the foundation of our business and we appreciate you passing on our name to anyone needing a mortgage. 

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2 thoughts on “New Mortgage Insurance Premiums Announced – Again!

  1. Pingback: Thinking of buying a property, but don’t know where to start? |

  2. Pingback: 5 Do’s and Don’ts for Homebuyers |

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