Last May, CMHC increased all their insurance premiums. The move wasn’t really a surprise to industry insiders. CMHC’s product line has been reduced. No more rental property mortgages. No more refinancing mortgages. No more secured lines of credit mortgages.
That’s a big chunk of business gone. And when revenues go down for this crown corporation, what do they do? They do what every reputable govt corp does. They raise fees and make the consumer pay more! (check out my charts below)
This time isn’t any different. Sure, the reason given for this increase was something to do with market capital requirements, but I’m not buying it. The revenues are down. Our Fed govt is under pressure because of lost revenue due to oil price wars. And with reduced tax revenue, the govt will put their hands in the pockets to make up that loss. I guess they figured, ‘Why not tap into the hot real estate market?’ After all, first time homebuyer’s with less than 10% down, aren’t in a position to argue.
I will say this… even with this latest increase, it’s still cheaper than the premiums charged 10 years ago.. 10 years ago, the insurance premium for less than 10% down was 3.75%. Here’s the chart from last year’s increase.
|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%|
And here’s the chart showing CMHC premiums after June 1st.
|Loan-to-Value Ratio||Standard Premium (Current)||Standard Premium (Effective June 1st, 2015)|
|Up to and including 65%||0.60%||0.60%|
|Up to and including 75%||0.75%||0.75%|
|Up to and including 80%||1.25%||1.25%|
|Up to and including 85%||1.80%||1.80%|
|Up to and including 90%||2.40%||2.40%|
|Up to and including 95%||3.15%||3.60%|
|90.01% to 95% – Non-Traditional Down Payment||3.35%||3.85%|
While I don’t support increasing fees on the backs of our young, I will say that it’s not a big change and it’s still less than what the last generation paid. Let’s hope these increases aren’t an annual event.
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Steve Garganis 416 224 0114 firstname.lastname@example.org