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TagCMHC increases insurance

Coming soon…Higher CMHC premiums March 17, 2017

CMHCThis is not a recording.  CMHC is increasing their premiums for the 3rd time in 4 years.  Here’s what it will look like.

Loan-to-Value Ratio Standard Premium (Current) Standard Premium (Effective March 17, 2017)
Up to and including 65% 0.60% 0.60%
Up to and including 75% 0.75% 1.70%
Up to and including 80% 1.25% 2.40%
Up to and including 85% 1.80% 2.80%
Up to and including 90% 2.40% 3.10%
Up to and including 95% 3.60% 4.00%
90.01% to 95% – Non-Traditional Down Payment 3.85% 4.50%

 

Wondering why they need to increase the premiums?  It’s not about trying to discourage homebuyers.  It’s to “preserve the returns on capital”, according to Steven Mennill, SVP CMHC.  Yup, the Crown corporation wants to focus on profit.  (show me the money).  At least they’re being honest about it. The overall amount of mortgages insured by CMHC has dropped in the past 4 years.  Down from $576billion to around $512billion.   So, it’s about maintaining profits while their book of business is shrinking.

Having said that, CMHC has lowered, increased and lowered their insurance premiums before.  We can expect them to change and adjust again.

In case you are wondering why the overall volume is going down when house prices are going up, it’s because the Fed govt has changed the mortgage rules so that it becomes more difficult to qualify for a mortgage.  Therefore, the amount of mortgages CMHC can insure is going down.

Now for some good news..

The overall cost to your mortgage is minimal.  Oh yeah, one more thing…without CMHC, we would all be digging deeper into our pockets to come up with 20% or 25% down, like the old days.   And while some may think that is how it should be, those days are long gone.  First time homebuyers don’t have $100k, or $200k sitting around to buy a home.   They need help.. And what’s wrong with helping our youth that are ambitious enough to want to own a home?

CMHC is a necessary evil.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

CMHC increased insurance premiums… again.. but still cheaper than 10 yrs ago.

CMHC 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) Continue reading “CMHC increased insurance premiums… again.. but still cheaper than 10 yrs ago.”

CMHC higher premiums start today

CMHCCMHC’s new higher insurance premiums take effect today.  That means it will cost you a little more if you are buying a home with less than 20% down.  The increases are minor and aren’t expected to have any effect on the housing market.  (by the way, CMHC has adjusted these premiums before)

What’s puzzling is why they felt the need to do this.  CMHC produces a healthy profit. As a crown corporation, those profits go directly into the government coffers.   CMHC arrears are at 0.33%.  That’s close to an all time low.

I guess it’s a good way to increase profits but they are making $2billion per year!   Here’s the old and new premiums.

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%

Your best interest is my only interest.   I welcome your questions and comments.  Like this article?  Share it with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

 

CMHC mortgage insurance rates increasing but still cheaper than 10 yrs ago.

CMHCCanada Mortgage and Housing Corporation (CMHC) announced they will be increasing the cost of insurance premiums effective May 1st.   The premium increase is minimal and isn’t expected to slow the mortgage volumes (see below for cost changes).  The move isn’t that puzzling given that CMHC’s most recent financial statements from 2013 show their volumes are down due to the Federal govt mortgage rule changes… but interestingly, profits were up 11% for the first nine months of 2013.

CMHC made $1.27billion as of September 30th 2013.   Not bad for a crown corporation that was created to encourage home ownership in Canada. CMHC puts a lot of money in the government coffers.   Arrears are lower at 0.33%.. that’s considered extremely low.    Some would say this is just a cash grab.  But I think it’s just being proactive as taking action before the expected volumes decrease.

CMHC PREMIUMS ARE STILL CHEAPER THAN THEY WERE 10 YEAR AGO

But here’s the bright side.   Continue reading “CMHC mortgage insurance rates increasing but still cheaper than 10 yrs ago.”

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