Let me start of by saying that any current approved deals via CMHC all the way till April 30th, 2014 will be at the old premium rates...even if it does not fund by April 30, 2014. It just has to be approved in the system (although if it has to go back to CMHC there is a chance that the premium would increase at that time).
Either way, if you currently have an approval with your broker or bank that is already CMHC approved, the premium will not increase. Any new mortgages approved May 1st, 2014 going forward will be subject to the new premiums.
Those new premiums are not too insane, and equate to about $5 more per monthly payment for all mortgages with less than 20% down payment.
Please see some actual numbers & Release via CMHC, by clicking on this link:
http://www.cmhc-schl.gc.ca/en/corp/nero/nere/2014/2014-02-28-1100.cfm
Increase in Mortgage
Loan Insurance Premiums for Homeowner and
1 - 4 Unit Rental Properties – Effective May 1, 2014
1 - 4 Unit Rental Properties – Effective May 1, 2014
As a result of its annual review of its insurance products and capital requirements, CMHC is increasing its mortgage loan insurance premiums for homeowner and 1- 4 unit rental properties to reflect its increased capital targets.
CMHC’s capital management framework is consistent with international practices and Canadian guidelines for mortgage insurers. Higher capital targets are consistent with Canadian and international industry trends and make the financial system more stable and resilient. As CMHC mortgage insurance is backed by taxpayers, capital holdings reduce Canadian taxpayers’ exposure to the housing market, and contribute to the long term stability of the financial system.
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.
Effective May 1, 2014, the premiums will increase by 15%, on average. The premiums** and premium surcharges will be as follows:
|
Standard Premiums
| ||
|
Loan-to-Value Ratio
|
Total
Loan Amount |
Increase to
Loan Amount |
|
Up to and including 65%
|
0.60%
|
0.60%
|
|
Up to and including 75%
|
0.75%
|
2.60%
|
|
Up to and including 80%
|
1.25%
|
3.15%
|
|
Up to and including 85%
|
1.80%*
|
4.00%*
|
|
Up to and including 90%
|
2.40%*
|
4.90%*
|
|
Up to and including 95%
|
3.15%*
|
4.90%*
|
|
90.01% to 95% (Non-traditional
Sources of Equity)
|
3.35%*
|
N/A
|
|
Self-Employed Borrowers
without Third Party Validation of Income
| ||
|
Loan-to-Value Ratio
|
Total
Loan Amount |
Increase to
Loan Amount |
|
Up to and including 65%
|
0.90%
|
1.75%
|
|
Up to and including 75%
|
1.15%
|
3.00%
|
|
Up to and including 80%
|
1.90%
|
4.45%
|
|
Up to and including 85%
|
3.35%*
|
6.35%*
|
|
Up to and including 90%
|
5.45%*
|
8.05%*
|
|
Rental Loans (1 – 4
Units)
| ||
|
Loan-to-Value Ratio
|
Total
Loan Amount |
Increase to
Loan Amount |
|
Up to and including 65%
|
1.45%
|
3.15%
|
|
Up to and including 75%
|
2.00%
|
3.45%
|
|
Up to and including 80%
|
2.90%
|
4.30%
|
Note: Premiums shown with “*” do not apply for Refinance transactions.
**For purchase/new construction loan applications, the premium rate is applied to the Total Loan Amount. For portability and refinance loan applications, the premium is the lesser of the premium rate applied to the Increase to Loan Amount; or the premium rate applied to the Total Loan Amount.
|
Premium Surcharges
| |
|
Extended Amortization Surcharge
(for each 5 year period beyond 25 years)
|
0.25%
|
|
Blended Amortization Surcharge
|
0.60%
|
|
Conversion surcharge for
self-employed borrowers without traditional documentation to support income
verification
|
1.75%
|
CMHC’s new premium rates will be effective for new mortgage loan insurance requests submitted on or after May 1, 2014. The current mortgage loan insurance premiums will apply for applications submitted to CMHC prior to May 1, 2014, regardless of the closing date. As is normal practice, complete borrower and property details must be submitted to CMHC when requesting mortgage loan insurance.
CMHC reviews its premiums on an annual basis and has adjusted them several times since being commercialized in 1998. Adjustments have included both increases and decreases to the premiums. Going forward, CMHC plans to announce decisions on premiums in the first quarter of each year.
