We have a quick mortgage update for you. As you may have heard, CMHC (Canada Mortgage and Housing Corporation) just announced it will be increasing its homeowner mortgage loan insurance premiums effective March 17, 2017.
When we heard about this update, we sat down with Mortgage Specialist, Tyler Schwende from SAFEBRIDGE Financial Group to get some answers. Check out our interview below:
ULG: Why does CMHC need to raise premiums? Don’t insurance companies already make enough money?
TS: Due to the recent mortgage rule changes handed down by the federal government as of January 1st it now requires mortgage insurers like CMHC to hold additional capital to buffer against potential losses. CMHC believes this helps ensure the long term stability of the lending system.
ULG: How does this affect my mortgage payment?
TS: This depends on how much you have available for down payment. On average though for a $350,000 mortgage this will increase your monthly mortgage payment by $11.50.
ULG: Will this affect me when I renew or refinance my mortgage?
TS: No. Default insurance is only applied when you purchase a home generally with less then 20% down.
ULG: Will the other default insurers like Genworth and Canada Guaranty also increase their premiums in line with CMHC on March 17th?
TS: As of yesterday, Grenworth also announced an increase in their premiums. It is highly likely that Canada Guaranty will follow suit, as they are required to be following the same federal capital requirements as CMHC.
We hope this help clarify the changes implemented. If you have any questions at all, do not hesitate to reach out!
Maziar Moini, Broker of Record - Home Leader Realty Inc.
300 Richmond St. W., #300, Toronto, ON M5V-1X2
