The Canada Mortgage and Housing Corporation (CMHC) have decided to raise premiums on mortgage insurance. It’s predicted that their competitors will raise their premiums as well. The CMHC made the announcement last week stating that the change will be effective on May 1st, 2014.
This change will not impact current homeowners. According to an article in the Financial Post, the CMHC told journalists that this change could cost the average Canadian homeowner an extra $5 per month on their mortgage payment.
“The higher premiums reflect CMHC’s higher capital targets,” said Steven Mennill, CMHC’s vice-president of insurance operations, in a release. “CMHC’s capital holdings reduce Canadian taxpayers’ exposure to the housing market and contribute to the long term stability of the financial system.” (Financial Post)
If you are planning on purchasing a home, and you have less than a 20% down payment you must purchase mortgage default insurance if you are taking out a mortgage from a bank covered by the Bank Act. This covers the bank should you default on your mortgage and is backed by the federal government.
Read full article - http://business.financialpost.com/2014/02/28/cmhc-mortgage-premiums/