Last Friday (February 28) CMHC announced that they plan to increase their insurance premiums by 15%. Currently CMHC’s premium rates are between 0.5 to 2.75%. As of May 1, 2014, new CMHC premiums will be slightly higher, ranging from 0.6-3.15%.
Shortly after the announcement, Genworth (one of the two private mortgage insurance providers) also announced their premium increase matching CMHC’s affective May 1, 2014. It’s left for us to see if the other mortgage insurer (Canada Guaranty) will follow.
What does this mean to the public?
The changes will take affect on May 1, 2014 for new homes and up to 4 rental unit residences requiring mortgage insurance. Current insured mortgages will not be affected by the change.
For the average Canadian family, the change is a minimal increase to monthly payments. It would increase homeowner’s cost by an additional $5 per month. This is not expected to have a material impact on the housing marking market.