The Canada Mortgage and Housing Corporation (CMHC) is increasing mortgage loan insurance premiums for homeowners. The crown corporation says the higher rates will only add about $5 a month to most mortgage payments.
In a statement released yesterday, CMHC said premiums had to increase in order for it to meet the new capital requirements introduced by the Office of the Superintendent of Financial Institutions (OSFI).
For those making a down payment of between 5% and 9.99% and who are borrowing $250,000, CMHC says their monthly mortgage payment will only increase by $4.70 as a result of the changes. Someone with a similar downpayment and a $450,000 loan will pay $8.47 more a month, while a $850,000 loan would mean a $15.98 jump in monthly costs. These higher premiums will be effective March 17, 2017.
“We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home,” says Steven Mennill, Senior Vice-President, Insurance. “Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”
A complete chart showing standard premiums by loan-to-value ratio is available on the CMHC web site.