Both CMHC and Genworth announced identical mortgage insurance premium hikes yesterday, which is causing a bit of panic, but in reality this change equates to a small amount of money for homeowners and borrowers.
The premium increase will bring the rate from 3.6 per cent to 4 per cent, coming into effect March 17, 2017.
“We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home,” said Steven Mennill, Senior Vice-President, Insurance. “Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.” [CMHC]
For the average mortgage-insured homebuyer, this will result in a $5 increase per month. But let’s break down some figures:
| Loan Amount | $150,000 | $250,000 | $350,000 | $450,000 | $550,000 | $850,000 |
| Increase to Monthly Mortgage Payment | $2.82 | $4.70 | $6.59 | $8.47 | $10.35 | $15.98 |
Based on a 5 year term @ 2.94% and a 25 year amortization
*Graph via CMHC
These changes do not effect mortgages that are already insured, and will not effect mortgage requests submitted before March 17, 2017. So if these changes worry you, now is the time to discuss your mortgage options.
If you have questions about how this effects you specifically, please contact me. To read the full release from CMHC, click here. To read the full release from Genworth, click here.
