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CMHC Mortgage Loan Insurance Premium Updates

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The CMHC recently announced that as of March 17, 2017 they will be increasing their homeowner loan insurance premiums. For most prospective homeowners these changes to premiums will likely result in an additional $5 to $10 per month compared to their old premiums.

This change is coming in to affect mostly due to OSFI’s change in capital requirements, which came into effect on January 1, 2017. Under these new requirements mortgage insurers are now required to retain additional capital to act as a buffer against potential losses and ensure the long-term stability of the lender.

How Do These Changes Affect Buyers?

These changes have the potential to affect home buyers. For example:

Assume you are looking to buy a home that costs $400,000 and have a 5% down payment ($20,000). In this scenario, your mortgage will amount to $380,000

The current premium (CMHC fee) is 3.6%, or $13,680. This means that the total cost of your mortgage is $393,680.

However, under the new rates, the CMHC fee will be raised to 4%, or in this case $15,200. This means that as of March 17, 2017 the total cost of your mortgage is now $395, 200. Assuming a mortgage rate of 2.5% (for easy math) and a 25-year amortization rate your monthly payment under the current premiums would be $1766.11. Under the new premiums, your monthly payment would increase to $1772.93.

The Rate Sheet – Old vs New

Loan to Value Ratio Current Premium Premium as of March 17, 2017
Up to 65% 0.60% 0.60%
66% to 75% 0.75% 1.70%
76% to 80% 1.25% 2.40%
81% to 85% 1.80% 2.80%
86% to 90% 2.40% 3.10%
91% to 95% 3.60% 4.00%

Written by
Robby Aurora

Robby has been a Mortgage Broker since 2009 and is a Managing Partner at Mortgage Connection. He is an expert in both residential and commercial mortgage loans and leads Mortgage Connection’s Commercial Division. Robby and his team manage a portfolio of mortgage clients, ranging from first time homebuyers to seasoned investors and commercial developers. His experience, financial savviness and detailed approach allows Robby to prepare and package files in a manner that can make all the difference in getting the right solution approved. Robby is a proud Calgarian with deep roots in the City and he is passionate about giving back and the group that is building Mortgage Connection.

Robby has a wonderful wife and is expecting their first child. Robby enjoys meeting new people, visiting new places and hitting the ball court.

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