CMHC Increasing Premiums as of May 1, 2014

The Canadian Mortgage and Housing Corporation (CMHC) announced an increase to its Mortgage Insurance premiums in a news release on Friday. This increase will take effect on May 1st, 2014 and will be mean an incremental increase to buying a home. 

For 90% loan to value mortgages there is an increase from 2.00% to 2.40%; for 95% loan to value mortgages there is an increase from 2.75% to 3.15%. This means on a $300,000 home purchase with 5% down, the CMHC costs goes from $7837.50 to $8977.50. 


CHMC says that for the average Canadian homebuyer requiring CMHC insured financing, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment. This is not expected to have a material impact on the housing market.

Homebuyers in Canada are legally required to purchase mortgage insurance if they don't put down 20 per cent of the price of the home up front. The homeowner pays for the insurance, but the lender is the beneficiary — it covers their losses if the homeowner defaults.

The vast majority of that insurance is sold through CMHC, although some private companies also offer it. Those companies, including Genworth Financial and Canada Guarantee tend to match whatever taxpayer-backed CMHC is charging.

True to form, Genworth did exactly that later on Friday, raising its insurance premiums to match CMHC's.
For more information on CHMC and Mortgage Insurance premiums visit CMHC's website here.