The Canada Mortgage and Housing Corporation (CMHC) will be increasing Mortgage Insurance Premiums once again effective March 17, 2017, which will result in an increase of $5 per month to the average CMHC home buyer. The CMHC provides mortgage loan insurance to help protect lenders against mortgage default and enables home buyers to purchase homes with a minimum down payment of 5%, and mortgage insurance is usually required for all mortgage applications whereby the borrower is putting less than 20% down payment of the purchase price.
Here is the breakdown of the new insurance premiums and how they will be calculated:
| Loan-to-Value Ratio | Standard Premium (Current) | Standard Premium (Effective March 17, 2017) |
| 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% |
As an example, currently, if a borrower was to purchase a home at $500K with the minimum down payment of 5%, the CMHC insurance premium that is added to the mortgage is $17,100, effective March 17, 2017, the new insurance premium will be $19,000, a difference of $1,900. The current insurance premiums will still apply for applications submitted prior to March 17, 2017, regardless of the completion date and will not impact mortgages that are currently insured by CMHC. “We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home. Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability,” said Steven Mennill, Senior Vice-President, Insurance.
Through our mortgage broker channel, our lenders also have access to two other mortgage default insurers that have not yet increased their insurance premiums but will likely follow suit soon. For more information on how the new insurance premiums will affect you, please contact us.
Canadian Mortgage and Housing Corporation, “CMHC to Increase Mortgage Insurance Premiums”, accessed January 18, 2016, https://www.cmhc-schl.gc.ca/en/corp/nero/nere/2017/2017-01-17-0830.cfm
