Canadian Mortgage Costs Are Increasing... Again

Near the end of 2016 Canadians experienced a couple significant mortgage rule changes affecting the mortgage amount one could qualify for as well as increased costs to mortgage lenders which of course have been passed down to consumers like you and me.

Now, Canadians need to prepare for further increases in mortgage borrowing costs. On Jan 17th, CMHC announced they would be raising their mortgage insurance premiums. Genworth Canada has already voiced that they will be following suite and Canada Guaranty won't be far behind with a similar announcement. Official CMHC news release here.

The following chart outlines the premium increases:


Canadians experience a premium increase seemly, not that long ago in July of 2014. CMHC has attempted to downplay the additional costs to borrows by stating the higher premium will result in an increase of approximately $5 to one's mortgage payments. I'm not sure exactly how they came to that number but, the premium increase are actually going to cost Canadians thousands.

Here's the math...

Using the average home price of $303,000 in my province (Saskatchewan) as of July 2016, a home buyer with 5% down would currently pay a premium of $10,362.60. After March 17th the new premium will increase their borrowing costs by roughly $1,150. On a 10% down payment in the same scenario, the current premium would be $6,544.80 or at the new rates $8,453.70 - a $1,908 increase.

What this means to you is, if you've been contemplating purchasing a home and you should seriously consider making a purchase prior to March 17th, 2017. Of course, it is possible for most borrowers to skirt the mortgage insurer premiums with a 20% down but, there are very few people fortunate enough to be in that position.

If you have more questions, I would be happy to provide more answers or advice on the subject!


Ian Leverington, Mortgage Associate
Verico Crown Mortgage Services Inc.

306-596-3121
ian@skmortgage.net

www.ianleverington.ca

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