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CMHC & Genworth to raise premiums - How & when will this affect you?

Last week CMHC (Canadian Mortgage Housing Corporation) announced it will raise premiums as of May 1st. Genworth, the largest private insurer followed suit a couple days later. They say it is to cover new capital requirements that came into effect since the "great recession" a few years ago. There are 3 main insurer's in Canada. The other one is Canada Guaranty. They may also follow.

 
This kind of insurance is required for someone who is buying a home with less than 20% down payment. It's a one time fee that's based on a percentage of the mortgage taken out. It can be paid up front or added onto the mortgage. On a 400K mortgage with 5% down the additional premium is about $1600. It will also result in an average $5 increase in your mortgage payment should you choose to add the premium to the mortgage proceeds.
 
Here's a breakdown of the increases along with CMHC's question & answer media release
 
Effective May 1st the following rate increase will come into affect for insured mortgages: Please see the linked news release from CMHC:

http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2014/2014-02-28-1100.cfm

Effective May 1st, CMHC Purchase (owner occupied 1 – 4 unit) mortgage insurance premiums will increase by approximately 15%, on average, for all loan-to-value ranges.
 

Loan-to-Value Ratio

Standard Premium (Current)

Standard Premium (Effective May 1st, 2014)

Up to and including 65%

0.50%

0.60%

Up to and including 75%

0.65%

0.75%

Up to and including 80%

1.00%

1.25%

Up to and including 85%

1.75%

1.80%

Up to and including 90%

2.00%

2.40%

Up to and including 95%

2.75%

3.15%

90.01% to 95% – Non-Traditional Down Payment

2.90%

3.35%

 
 

Tony Marchigiano 1-155 Water Street
Mortgage Broker Vancouver, BC
 
cell: 604 505 7109
fax: 604 909 4666
 

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