On January 17 CMHC announced that they are increasing insurance premiums (the fees that are added to mortgage for clients purchasing with less than 20%) by between 36% and 10%. For clients with 15% down payment the premium is increasing by 36%, for 10% down payment, 22.5%, and 5% down payment they are increasing by 10%. These changes are a direct result and response to the widely criticized and somewhat questionable mortgage industry changes that the liberal government enacted in October and November of 2016.
I have included the link here to the CMHC news release, a couple of take away points that I found interesting:
*CMHC took a very clever and consumer debt based approach to delivering this fee increase. Instead of explaining the true added costs to Canadians they instead had the rather interesting approach of “selling the payment” and not the cost. We all know that this is a widely used strategy for a whole host of consumer goods ranging from vehicles to furniture and everything in between. Maybe I just hoped for a bit more practical transparency from a crown corporation that is positioning themselves as working for the betterment of Canadians.
*The true cost increase on a $300 000 mortgage for purchasers with 15% down payment is $3000, with 10% down payment it is $2100, and with 5% down payment it is $1200. This is true extra money that all new insured purchasers in Canada will be paying.
*The effective date for this change is March 17, this means that if you have CMHC approval prior to this date, even if your possession is after this date, you will still receive the lower premium.
If you are considering purchasing in the spring and you find your ideal home in February or March, moving forward with your purchase before the deadline could save you a significant amount of money. Please always feel free to contact me with any questions or if we can help you with your mortgage in any way.