Starting tomorrow, homebuyers without a 20% down payment, will be paying more to purchase a home. Canada’s largest mortgage insurer, CMHC, is hiking its premiums from 0.10 to 0.40 percentage points. The increase takes effect May 1, 2014, and will be the first increase from CMHC since 1998.
The average CMHC insured mortgage at 95% loan-to-value was $248,000 in 2013. CMHC says this will raise that homeowner’s monthly payments by about $5. Not too agonizing. [Canadian Mortgage Trends]
When the numbers are broken down (as above), it’s not the end of the world and homeownership is not out of reach. However, many investors are still arguing that this increase by CMHC is “unfair”. In a Canadian Real Estate Magazine article, one investor is quoted as saying: “It is a little added cost that I feel, as an investor, is obviously a little pinching.”
There’s no word yet on whether the other two private insurers will announce rate increases, but it’s predicted that will happen. If you have any questions about what this rate increase means, please feel free to contact me. And share your comments about this news with me on Twitter too.
