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You’ve bought a new house, and you’re sitting with the bank’s loans officer ready to sign for that mortgage. Then she casually asks, “Would you like mortgage life insurance with that?”—almost like your waiter asking whether you’d like fries or salad with your burger.
First, what is mortgage life insurance? It seems pretty straightforward. It’s insurance that pays off your mortgage if something prevents you from doing so. After all, you want your family to be protected against foreclosure should you die or become disabled or suffer from a critical illness.
The horror stories can multiply before your eyes. But your friendly loans officer assures you that the premium only adds up to a few extra bucks a month tacked on to your monthly mortgage payment, so it’s hardly noticeable. If you decline, the loans officer might even ask you to sign a waiver, declaring that you’ve turned down this golden opportunity.
So, why not?
First and foremost, you probably don’t need it. If you already have life insurance, whether term, universal, or whole life, and it’s at least for the amount of your mortgage, you’re already covered.
Add a properly designed extended health, long-term disability, and critical care insurance package that many people already get through their employee benefits program, and you’re pretty much covered in case illness prevents you from covering mortgage payments.
If you need more, you can increase the size of your term life insurance at very low cost, especially if you’re young and in good health.
Next in the reasons for “why not mortgage insurance” is the product itself. It just doesn’t give value for money. Mortgage insurance pays only to the amount of the outstanding balance of the mortgage, whatever that balance is.
The maximum insured amount is typically $500,000, which may not be enough anyway. But even if the principal amount of your mortgage is paid down, the premiums on your mortgage insurance won’t change. So you’re actually paying more and more for less and less as time goes on.
And the mortgagee gets the funds in the event of your death. If you were hoping for an additional sum to provide living expenses and so on, forget it. The mortgagee is the one and only beneficiary. To provide for your family, you’ll need to buy ordinary term life insurance where beneficiaries receive the entire proceeds, no strings attached.
So again, why bother with mortgage insurance to begin with? Just buy additional—and cheaper—term life to cover the mortgage.
There are also other restrictions on mortgage life insurance that make it poor value for the money. Coverage is tied to the lender and the property—it isn’t portable. If you sell your home or transfer your mortgage business to another bank, your policy is cancelled and coverage stops. Premiums are not refundable.
There is one last, really big reason for not forking out the big bucks for mortgage insurance: claim denial. Typically, you’ll be asked to buy mortgage life insurance when you’re actually signing the mortgage document.
You’re under a lot of pressure, and you’ve already agreed to borrow a huge sum of money. Okay, you’ve caved. Another few bucks, another quick application form. You fill out the application, and check off a few boxes on an innocuous-looking medical questionnaire, and you’re done.
Actually, you’re done like toast.
That’s because mortgage life insurance is sold without qualifying you. It’s a form of underwriting called post-claim underwriting. Your application is filed with the underwriting insurance company (not the bank, unless it’s the bank’s insurance company, of course) but not reviewed to see if you qualify for coverage until a claim is actually made.
What could possibly go wrong? Plenty, it turns out.
If you did not read the questions on your application thoroughly and answered a yes-no question incorrectly, a future claim could be denied. The trouble is that the medical questions on mortgage-insurance applications are so wide-ranging that it’s very easy to inadvertently provide an incorrect answer.
They may include something like this: “Have you ever consulted a medical practitioner, physician, specialist, or attended a hospital or other medical facility, or taken any medications or received treatment for a cardiovascular, respiratory, digestive, or nervous systems complaint?”
The key word is “ever.” Well, who hasn’t ever gone to the doctor with a tummy ache (digestive), a bad cold or the flu (respiratory), or a migraine (neurological) at least once?
But if you answered “no” on your application, as most people are tempted to do (thinking that the question relates only to recent serious illnesses and heavy-duty prescription drugs), then the insurance company can (and often will) claim that you “lied” on your application and did not disclose pre-existing conditions.
Because you did go. It’s right there in your doctor’s medical file. Claim denied! Start looking for new accommodations. (But you might get your premiums back.)
And finally, unless you’re applying for a high-ratio mortgage or considering an arm’s-length mortgage for your RRSP, mortgage insurance is not a requirement for getting a mortgage.
Mortgage insurance comes with high costs, tight restrictions, and the dodgy post-claim underwriting. For those reasons, it’s poor value for your premium dollar.
Instead, if you wish to protect your family against default on your mortgage, consider a much cheaper term life policy, which is reviewed at application to ensure you qualify, and that you can renew every five years, adjusting the insured amount to match the declining principal balance owing on your mortgage.
Your best bet is to consult a knowledgeable financial planner or licensed insurance agent, who will make sure you get the proper sides of insurance to go with your main course
A new-to-Canada applicant is someone who has obtained permanent resident status or landed immigrant status within the last 36 months. Employment, income and taxes are all earned & declared in Canada.
A non-permanent resident is someone who is living, working and filing taxes in Canada with all the appropriate & necessary work visa documentation in place. These applicants may be here with an intention to apply for permanent resident or landed immigrant status in the future, or they are temporarily re-located to Canada for a specific period of time for work purposes.
A non-resident is someone who is earning their income and filing their
taxes outside of Canada. As long as the income is being declared outside of Canada, applicants are viewed as non-resident without exception.
Up to 95% financing is available for new-to-Canada applicants with CMHC insurance on Non Permanent Resident Mortgage.
Confirmation of permanent resident or landed immigrant status.
Other documents as outlined below.
Download all the CMHC rules by completing the form below
Speaking to my Mortgage Broker Marvis Olson She has summarized the important Facts:
1). Buyers need to have an International Credit bureau –except for the US as I’m able to obtain direct from that country.
2). Buyers qualify using stand guidelines except even with salaried —I have to have the last tax return filed-we have to prove they are up to date & have no taxes owing in whatever country they are obligated to file in.
3). Rigorous confirmation of down payment—they need to pass the anti-money laundering & terrorism test—–90 day history of funds in their bank accounts.
4). They will need to come here to sign at lawyers-no power of attorney deals.
5). They will need a Canadian bank account where the down payment gets transferred into ——& then payments are taken.
6). Full appraisal——but that is standard on any revenue properties-or second homes.
If I can help your clients have them contact me directly:
P 403-620-8200 F 403-451-1697
For the CMHC information sheet for Newcomers & Non-Permanent Residents, Click Here.
Non residence lending is a program for Canadians living abroad and non Canadian Citizens that wish to purchase a property in Canada.
Do note that various lenders have restricted lending areas, and in some cases, certain lenders will not lend under this program.
This is a surprise announcement from CMHC, although it appears to be consistent with their stated objectives about reeling in debt loads of Canadians.
The other two insurers (Genworth and Canada Guarantee) have not yet announced their intentions, but they normally follow with what CMHC does. The exception might be when they see this as a way to grow their business in an area they covet (and I don’t think this fits that bill).
Here is the Globe and Mail article just published: http://www.theglobeandmail.com/report-on-business/economy/housing/cmhc-tightens-mortgage-insurance-offerings/article18224612/
The upshot is, if you have clients who are self-employed and need to apply using ‘Stated Income’, or clients who are considering buying a 2nd home with a down-payment under 20%, CMHC must commit to the mortgage prior to May 30th to be eligible under the current program.
And here is the official CMHC announcement:
CMHC Changes Its Mortgage Insurance Product Offering
OTTAWA, April 25, 2014 – As part of the review of its mortgage loan insurance business, CMHC is discontinuing its Second Home and Self-Employed Without 3rd Party Income Validation mortgage insurance products effective May 30, 2014. Self-employed Canadians can still qualify for CMHC insured financing through CMHC homeowner products with a validation of their income using traditional methods.
“CMHC helps Canadians meet their housing needs and contributes to the stability of the housing market and finance system” said Steven Mennill, Senior Vice-President, Insurance. “As part of the review of its mortgage loan insurance business, CMHC is evaluating its products and services to ensure they are aligned with these objectives.”
As a result of changes to CMHC’s mandate to contribute to the stability of the housing market, benefitting all Canadians, while effectively managing and reducing taxpayers’ exposure to risk, CMHC is undertaking a review of its mortgage loan insurance business. This is the first set of changes resulting from this review.
CMHC Second Home and Self-Employed Without 3rd Party Income Validation will remain available for new mortgage loan insurance requests submitted to CMHC before May 30, 2014, regardless of the closing date of the home purchase. As is normal practice, complete borrower and property details must be submitted by a lender to CMHC when requesting mortgage loan insurance.
Combined, CMHC Second Home and Self-Employed Without 3rd Party Income Validation account for less than 3% of CMHC’s insured business volumes in units. Given the limited use of these products, their discontinuation is not expected to have a material impact on the housing market.
As Canada’s national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable housing solutions that will continue to create vibrant and healthy communities and cities across the country.
The gap between Fixed vs Variable Rate Mortgage products has narrowed in recent years. And while fixed rates are starting to rise they offer certainty in a monthly payment. On the flip-side, variable rates remain low, but are the riskier of the two choices – so how do you choose?
Your income, lifestyle and risk tolerance will weigh heavily on your decision and will inevitably determine which product suits your circumstance.
The appeal of variable-rate mortgages is that the interest rate is typically lower than that of fixed-rate products. However, the main drawback is the risk involved. Without warning, rates could increase or decrease.
One of the quickest ways to determine if a variable-rate mortgage product is right for you is whether or not you can afford rate increases, says Michael Cameron, a broker with Axiom Mortgage Partners in Edmonton.
The first thing you should assess is your current income, earnings and potential for increase of earnings, says Gerri Vaughan, a broker with Invis in Edmonton. “Can they weather any storms – rate increases or decreases?”
If you can comfortably afford mortgage rates that are two per cent higher than what you’d pay on your variable, then you may be OK, says Cameron. But proceed with caution. “Rates right now are at historic lows. So low that it’s quite conceivable you could see rates double in the next little while,” he says.
If you’ve decided you can afford a variable-rate mortgage, the next thing you will want to determine is if a variable-rate mortgage fits your personality. If you’re the type of person who can’t sleep at night knowing your rate may go up, even slightly, a variable-rate mortgage may not be the best option for you, says Cameron.
One thing you can do to mitigate risk and reap some rewards of choosing a variable-rate product is to fix your payment at a set amount higher than the minimum requirement, says Cameron.
Michelle Brienza of Michelle Mortgages is a strong proponent of variable-rate products. She says 70 per cent of her clients choose variable.
“If you pick a variable-rate product and make the minimum monthly payment, it doesn’t work,” Brienza says.
Vaughan suggests setting your variable-rate mortgage payment at the current five-year fixed rate. Not only will you have a buffer if rates rise, but it will allow you take advantage of the lower variable rate by allocating more of your payment to pay down the principal.
“You’ll be ahead in terms of amortization, you’ll be using your prepayment privileges (many Canadians don’t because they can’t afford to) and if rates begin to rise, you can lock in for at least the length of the remainder of your mortgage term, so you’ll be getting the best of both worlds,” says Brienza.
While it may seem like a good idea to take advantage of a variable-rate product while rates are low and switch to fixed when rates begin to rise, some mortgage specialists caution against it.
“I don’t suggest anyone’s going to have a whole lot of luck in timing the market. In my opinion, you take a variable-rate product because you believe over time, the variable rate is going to average lower than your longer-term fixed,” says Cameron. “You can have 10 phDs in economics and you’re still not going to know what rates are going to do and when.”
However, some people will still take variable with plans to watch the rate and convert it when rates start to rise. But remember, when you convert it, you convert it at the rate at the time of conversion, says Vaughan. “If rates turn around and start going up, they’ll go up a lot faster than they came down so you may miss the boat,” she says.
Moreover, conversion rates are something to ask about with variable products. If you have an open variable product that you can convert at any time, ensure you know what rate you’ll receive if you switch to a fixed-rate product. Is it the best fixed rate available, or a posted fixed rate? The posted rate may be 5.79 per cent but there may be a 3.79 per cent fixed rate available, says Cameron.
“Anyone who would have selected a variable-rate product over the last 10 years will have done very well,” says John Turner, director of mortgages at Bank of Montreal in Toronto.
“Considering a variable-rate mortgage is still a good thing given the rate difference. But we’re likely at the bottom end of the interest rate environment.”
While there might be a little more downward movement in the future, it becomes a waiting game, he says.
In the past, variable rates used to be calculated prime minus, while today they’re prime plus, narrowing the spread, which is the difference between the interest rate on a fixed-rate mortgage or a variable-rate mortgage. In May, the spread between a current variable rate and a fixed rate was negligible.
Five-year fixed products have historically been popular in Canada. But because of this narrowing and drop in rates, for some, the decision to choose a fixed-rate product is a no-brainer.
For instance, at the time of publication, variable rates were hovering around three per cent, while fixed-rate products could be found for just under four per cent.
“The risk (of variable-rate products) versus the reward is not substantial enough, in my opinion, to take the risk,” says Cameron, who in May told Buying Your First Home that when fixed rates are within a percentage point of variable rates, fixed is the way to go.
While most people are risk-averse, first-time buyers nearing the beginning or growth of their families are more likely to choose a fixed mortgage because it means they can budget for the length of their mortgage term, says Turner.
In addition, the costs of purchasing a new home and maintaining it can swallow a large portion of their income, not leaving a lot for possible rate increases, he says.
If there’s a particular rate and payment you feel good with and know you can afford, then most people will prefer the peace of mind, says Turner.
“I always tell people that if you’re the type of person that always buys the extended warranty, then a variable-rate product is probably not for you,” says Cameron.
Consider this analogy from Cameron: Look at the difference between the fixed rate and the variable rate as your insurance premium. Assuming your variable is three per cent and your fixed is 3.75 per cent, you’re paying a 0.75 per cent insurance premium. If that works out to a $75 a month difference in payment, you’re paying $75 a month to have the peace of mind and security to know that for the next number of years your payments aren’t going to change.
“Of course, the variable rate today doesn’t necessarily mean it’s going to be the variable rate tomorrow,” he says. “If you can boil it down to a dollar per month cost, it makes it a lot easier for people to make a decision.”
Once you’ve made a decision about rates, you’ll need to decide on the length of the mortgage term.
The length of time you expect to be in a property may have a bearing on the length of your mortgage term. Some buyers will decide they don’t want to worry about renegotiating their mortgage payment for the length of time they plan to live in the house, says Vaughan.
The average length of a mortgage term is five years for both fixed vs Variable Rate Mortgages.
In Vaughan’s experience, some people will take a term to match elections, as historically, interest rates tend to be lower during election years. This isn’t always the case, but it is public perception, she says.
While rates are important, flexibility and features may be the determining factor for you when choosing your mortgage product.
The ability to put lump-sum payments down on your principal is what’s usually referred to as prepayment privileges. Banks and lenders differ on the amount usually ranging from 15 per cent to 20 per cent of the amount owed. Be sure to check the frequency because some lenders only allow this payment to be made once per year, which may not be convenient for you. So, if they allow you to prepay $10,000, and you opt for $5,000, you won’t be allowed to pay off another $5,000 in the same year. Lump-sum payments are traditionally annualized, meaning you can’t skip a year and then double it the next year.
You may want the flexibility to put down large lump-sum payments if you receive a bonus through work, a tax refund, an inheritance or just come into some extra money, says Vaughan.
“The other thing that I’ll typically advise them to do is round off their payment,” she says. “I’m a round number thinker. So if the payment is $873, I’ll round that number up to $900 because you won’t feel it in your budget, but that extra $27 is going to pay down your principal that much faster.”
You may also want to see if you have the option to increase your payments. With some products you can increase your payment by 10 per cent to 20 per cent.
“Price is important. Getting a great rate is important. You can have the greatest rate in the market on a product but unfortunately when it comes to your life and events all of a sudden you can be stuck,” says Turner. “So I think it’s important to look at features. What would you use or could you use as opposed to the nice-to-have.”
While uncommon, some lenders offer payment holidays. For instance, if a borrower is going on maternity leave or paternity leave, Bank of Montreal has a program called family care, which allows a customer to defer four months’ worth of payments.
Another feature available is re-borrowing capability. How important is re-borrowing to you? As you pay down the mortgage, can you get access to the cash again? Not all lenders will offer this option. But it might be one worth looking at.
“For instance, if you receive a bonus for $20,000 and put it toward your mortgage, and then your roof falls in and requires $10,000 worth of repairs, can you retrieve the prepayment on your mortgage?” asks Turner, whose company offers a feature that would allow borrowers to do so.
If there’s a possibility you’ll move before your mortgage term is up, you might want to consider a portable mortgage product. Not all mortgages are portable so be sure to ask your mortgage specialist if the products you’re considering can be transferred to a new home. If you’re considering a closed product and there’s some type of penalty you could incur, ensure you get the details of the penalty upfront, says Turner.
The standard penalty to pay out a fixed-rate mortgage is either three months’ interest or interest rate differential – whichever is greater of the two.
If you got a mortgage two years ago when rates were at 5.5 per cent or six per cent and if you wanted to rewrite that mortgage to current rates which are around four per cent you are looking at an interest rate differential, which could be thousands of dollars depending on your mortgage, says Vaughan.
Basically what you’re doing is prepaying those interest charges on your contract – the difference between your contract rate and your current rate – to your maturity, she says.
It’s not advantageous to buy out your mortgage, unless you have less than two years to maturity, Vaughan says. If you still have four years until maturity, you’re only really buying an extra year as you move into a five-year term. If you don’t have the cash to pay that interest rate differential, then you have to apply it to the mortgage and then you’re paying interest on interest, she says.
So if you’ve got the cash, Vaughan advises to make a principal payment on your mortgage and don’t buy the rate down.
Break it down (Source: John Turner, Bank of Montreal)
Variable-rate products appeal to some because the rate is calculated based on prime and is typically lower than the fixed rate. Payments are generally fixed over a period of time (eg. three years). As interest rates go down more of the mortgage payment goes to principal. But as interest rates go up less goes to principal. This means that your Amortization period (the number of years you’ve selected to repay the mortgage (both principal and interest) could be longer or shorter if interest rates have risen or fallen since the start of the term.
Open variable: Being open allows you to put down as much as you want, or pay off the entire mortgage at any time. It also lets you change to another term at any time, without charge. Payments are generally fixed throughout the term. This product is ideal for those who have swings in their cash-flow that would allow them to pay their mortgage off in lump sums, are thinking of selling their home, wish to prepay more than 20 per cent of their mortgage amount or believe rates will decline. However, expect higher rates with an open product than a closed product of the same term length.
Closed variable: With closed products, the payments are generally fixed for the term. It’s important to know what your prepayment options are. Can you make lump-sum payments? How much and how often? Typically a closed mortgage will have limited prepayment options.
The appeal of fixed mortgages is that they allow you to accurately budget. You know what your mortgage payment will be for a determined length of time, as well as how and when your mortgage will be paid in full.
Open fixed: You’re able to prepay in full or in part at any time with no prepayment charge. In addition, you can change to another term at any time without charge. Ideal for those who want maximum flexibility, are thinking of selling their home, wish to prepay more than 20 per cent of the mortgage amount or believe rates will decline.
Closed fixed: Your interest rate and payments are fixed for the term you choose. This product is ideal for the budget-conscious who prefer peace of mind, knowing rates will not rise during the term. They also want a lower rate than an open mortgage of the same term.
Convertible fixed: Let’s you convert to a closed term of one year or longer at any time, without charge. This product may be for you if you want to keep your options open and want a lower rate than an open mortgage of the same term. Your prepayment privileges are less flexible than those of an open nature.
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I have about 50 posts saying the continued inbound immigration from all places in Canada and the world supports our home prices and high quality jobs down town. Here is more awesome news …
… It was the highest pace of monthly job creation in nearly three years and well above the average gain of about 6,000 since the end of the 2009 recession.
And Alberta accounted for a stunning 87 per cent of all the jobs created in the entire country since February of last year.
On Friday, Statistics Canada reported that Alberta accounted for the ‘lion’s share” of annual national employment growth in February as the unemployment rate in the province dipped to 4.3 per cent from 4.6 per cent in January while it fell to 4.7 per cent from 4.8 per cent in the Calgary region.
Year-over-year employment was up by 3.5 per cent or 27,000 positions in the Calgary area. In Alberta, there were 18,800 new jobs created from January, up 0.8 per cent, and year-over-year employment grew by 82,300 positions or 3.8 per cent.
It was the highest pace of monthly job creation in nearly three years and well above the average gain of about 6,000 since the end of the 2009 recession.
And Alberta accounted for a stunning 87 per cent of all the jobs created in the entire country since February of last year.
“Alberta is expected to lead Canadian investment growth in 2014, and the hiring intentions reflect that,” said Ben Brunnen, economic consultant in Calgary. “Good economic prospects have been drawing Canadians to our province in droves for the last 12 months, and this latest report suggests that this trend should continue for the foreseeable future.”
Realtor Update Winter, 2014 Download
Mark Herman; Mark.Herman@shaw.ca AMP, B. Comm., CAM, MBA- Finance
1. Much to do about nothing: CMHC increases mortgage insurance.
• May 1st the new CMHC fee increase goes into effect.
• Genworth quickly followed, matching the effective date and premium increases. Canada Guaranty has not yet but is expected to increase their rates by the same amount – so rates for all will be the same but are not right now.
• To AVOID the increase:
o The purchase must be underwritten and submitted to the insurer by the bank BEFORE end of day April 30. We will still be in the Spring rush so banks may be backed up; it is important to avoid last minute rushes during this time.
• The fee is inconsequential. A $400,000 mortgage has a monthly payment increase of less than $10.
New fee May 1, 2014
Down Payment Old Fee New Fee
5%(borrowed) 2.90% 3.35%
5% 2.75% 3.15%
10% 2.00% 2.40%
15% 1.75% 1.80%
Nowhere in the news: Very little is being discussed on self-employed borrowers without traditional proof of income. Their premiums are going up as well.
New fee May 1, 2014
Down Payment Old Fee New Fee
10% 4.75% 5.45%
15% 2.90% 3.35%
20% 1.64% 1.9%
25% 1.00% 1.15%
35% 0.80% 0.90%
2. More Importantly – Full Implementation of the B20 (and soon the B21) Rules
• Some of the banks are already underwriting with the new rules causing unexpected declines and delays.
• Banks are about to start using 3% of the balance for unsecured loans and credit cards as the monthly payment. Right now some are and some are not.
• Clients that have multiple properties or want to keep their existing home as a rental, to purchase another property are increasingly having a difficult time for various different qualification reasons. (rental offsets or rent added to income, secured lines used for down payment etc.)
Bottom line: Buyers that are close to the limits of the lending guidelines may no longer qualify. Many of them are self employed buyers but even the first time home buyer with a little bit of credit debt are having trouble. It is important that a buyer’s application is presented properly to the right lender and the right insurer the first time.
The Mortgages are Marvelous Advantage
Why not take advantage of the skills, years of experience, and non-biased advice of a professional, dedicated, top- broker with top-tier access to a variety of lending institutions for your buyers?
All Buyers should be fully pre-qualify before you go shopping: Your pre-approval is fully underwritten by a past senior bank employee. Income, down payment and credit information are in the file upfront and any wrinkles are ironed out before putting in an offer.
Download the original PDF file for your records. Download
One major mortgage insurer wasted no time announcing its own premium changes, following CMHC’s major statement Friday.
“We believe this new pricing is prudent and more reflective of increased regulatory capital requirements,” Brian Hurley, chairman and CEO of Genworth Canada said in an official release. “These pricing actions are supportive of the long-term safety and stability of the Canadian housing market.”
The rate hike is set to take effect May 1, 2014; the same day as CMHC’s.
This recent announcement is unsurprising, given the fact that Genworth – along with its counterpart, Canada Guaranty – has been calling for CMHC to hike its rates as recently as December of last year.
Genworth’s new premiums exactly align with CMHC’s and the reasoning for the hikes echo the Crown Corporation’s as well, who stated “CMHC’s capital holdings reduce Canadian taxpayers’ exposure to the housing market and contribute to the long term stability of the financial system.”
With two of the three major mortgage insurers raising their rates, perhaps it is only a matter of time before Canada Guaranty follows suit.
Original Story at http://www.mortgagebrokernews.ca/news/second-mortgage-insurer-follows-suit-176761.aspx
The change will only apply to mortgages underwritten after May 1, 2014 and it will apply to all homeowner business from that day forward as a result of increasing capital targets. Premiums will rise about 15 per cent, according to CMHC, though it isn’t expected to have a major effect on the housing market.
“In 2013 the average CMHC insured loan at 95 per cent loan to value ratio was $248,000; using these figures a higher premium will result in an increase of approximately $5 to the monthly mortgage payment for the average Canadian homebuyer,” Peter De Barros, at CMHC ‘s executive director of communications said during the media conference call. “This is based on a five-year term using current mortgage rates and 25 year amortization. The premium increase is not expected to have a material impact on the housing market.”
CMHC also expressed its plans to make an announcement about its premiums – which are reviewed each year – in Q1 of every year going forward. The Crown Corporation has made a number of changes to its premiums; though this hike is the first increase since decreases between 2002/2003 and 2005/2006.
The increase was not a department of finance initiative, according to CMHC.
“Not in response to anything in particular although, certainly, the international and Canadian regulatory guidelines over the past years have trended to higher capital holding levels for mortgage insurers and obviously we are no exception to that,” Brian Nash, chief financial officer of CMHC told reporters.
It remains to be seen whether Canada’s two other insurers, Canada Guaranty and Genworth follow suit.
“I can’t comment on what they might do,” Steven Mennill, CMHC’s vice-president, insurance operations told reporters.
Original Article at http://www.mortgagebrokernews.ca/news/cmhc-raises-premiums-176749.aspx