CHBA - Lethbridge Region
CMHC Announces Premium Increase
Today’s announcement by CMHC increases the premiums on mortgage insurance on average by approximately 15%. Mortgage insurance is required for purchasers with less than 20% down payment. The link below to the CMHC web site also includes a backgrounder which highlights the impact on monthly mortgage payments. While borrowers with only 5% down will be the most impacted, the overall effect on monthly carrying costs is relatively modest and should not have a notable impact on the housing market. CMHC’s private sector competitors (Genworth and Canada Guaranty) have said publicly they favour an increase in premiums to bolster profitability. However, they could forgo the full increase announced by the crown agency to increase their market share. Realtors will use this announcement to create some level of urgency in the market, encouraging buyers to act before May 1st to avoid the increase in fees. This may cause a slight surge in the market during a time of year when sales traditionally begin to trend upward.