The federal agency announced Friday it is to increase the insurance premiums across the board, effective May 1. The change does not impact existing homeowners and is expected to raise up to $175-million for CMHC.
CMHC said, the premium change should cost the average new home buyer about $5 per month on their mortgage come May 1.
This effects ONLY Canadians who have less than 20% downpayment and are borrowing from a financial institution covered by the Bank Act. The insurance covers banks in the event of default and is ultimately backstopped by the federal government. There is close to $1-trillion backed by Ottawa, including private players.
At the top end of the market for someone with only 5% down on a property, the premium CMHC charges will go from 2.75% to 3.15%. For example, if you were to borrow $450,000 mortgage, the insurance premium would increase your mortgage from the original percentage of $12,375 (2.75%) to $14,175 (3.15%).