On Friday, CMHC announced that it was increasing its mortgage insurance premiums. Canadians looking to purchase with a down payment that is less than 20% should be prepared to see a slight increase in the price they get charged for mortgage insurance.
In recent years, prospective homeowners in Canada have faced a significant challenge—the increasing costs associated with obtaining mortgage insurance through the Canada Mortgage and Housing Corporation (CMHC). As one of the key players in the Canadian housing market, CMHC plays a crucial role in facilitating affordable homeownership by providing mortgage insurance to lenders. However, the escalating expenses associated with CMHC services have left many Canadians wondering about the factors behind this trend.
Understanding CMHC:
The Canada Mortgage and Housing Corporation was established with the goal of making homeownership more accessible for Canadians. CMHC provides mortgage loan insurance, enabling homebuyers to secure financing with a down payment of as little as 5%. This insurance protects lenders in the event that borrowers default on their mortgage payments, making it a vital component in the country’s housing finance system.
The Cost Dynamics:
Several factors contribute to the increasing costs of CMHC services, impacting both lenders and homebuyers. Let’s delve into some of the key elements driving up the expenses:
Many industry experts don’t think that this will have an impact on the Real Estate Market, and I would tend to agree. It has been a while since CMHC increased these premiums and an increase now might not be a bad idea.
Interest rates are still really low; both on the Fixed Rate and Variable rate Mortgage Products. We have been seeing a lot of activity running up to this Spring Market and expect that the really low interest rates will more than make up for any increase in Insurance Premiums.
If you are looking to Purchase or Refinance your biggest concern should be finding the right Lender, with the best variable rate mortgage, unless you think bond yields are moving?
Sound, unbiased mortgage advice.
