CMHC (Canada Mortgage Housing Corporation) & now Genworth have both raised their default insurance premiums on all loan to value financing. This is the 3rd time in three years! When & why do they need to do this and how much will it cost borrowers? Check out the full article from MortgageBrokerNews.ca for the answer to these questions along with a chart to show you the exact increases:
"CMHC announced early Tuesday it is increasing its loan insurance premiums effective March 17."
“We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home,” said Steven Mennill, Senior Vice-President, Insurance. “Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”
According to the Crown Corporation, the average homebuyer will see a $5 increase to their monthly mortgage payment as a result. That $5 certainly adds up, however, to a total of $1,500 over the course of a 25 year mortgage.
The increase is the result of last year’s mortgage rule changes, CMHC claims.
“Capital requirements are an important factor in determining mortgage insurance premiums. The changes reflect OSFI's new capital requirements that came into effect on January 1st of this year that require mortgage insurers to hold additional capital,” it said in a release.
“Capital holdings create a buffer against potential losses, helping to ensure the long term stability of the financial system.”
See the table below for the exact premium increases: