Saturday March 8, 2014
CMHC CHANGES INSURANCE PREMIUMS
Canada Mortgage and Housing Corp. (CMHC) announced that their insurance premiums will be increasing as of May 1, 2014. The increase will only apply to new mortgages, not those already insured. Though the average increase was by 15%, CMHC said it should only increase the average Canadian’s mortgage payment by $5 a month.
There are three mortgage loan insurance companies in Canada and the other two, Genworth and Canada Guaranty have already announced that they will follow suit.
Mortgage loan insurance is only mandatory when homebuyers have less than 20% as a down payment. The insurance helps protect lenders against mortgage default and allows consumers to purchase homes with a down payment as low as 5%. The insurance is obtained by paying an insurance premium that is typically tacked onto the mortgage. The amount of the premium is based on the home’s purchase price and amount of down payment.
Click here for more information on the new rate premiums.