CMHC changes rates again…
It’s nothing new. It’s actually the 3rd time in only 4 years. CMHC has announced Changes to Mortgage Insurance Rates once again. And by changes, I mean increases.
New home buyers have to dig a little deeper.
New home buyers have to dig a little deeper thanks to CMHCs new announcement. The government owned mortgage insurer said that the minor increase would amount to an extra $5 a month for the typical insured mortgage. But Marco Torto, a Mobile Mortgage specialist with TD Canada Trust, shared a document that shows the increase could be much higher. Check it out on my Facebook page.
The typical Edmonton buyer is taking on a 5 year term @ 2.94% and a 25 year amortization. With a healthy down payment of between 15% but less than 20%, the CMHC fees are going to increase by twice as much as what CMHC is saying. On a $250,000 mortgage it will be nearly $12/month difference. While it’s not going to keep the average consumer from buying, it’s just another payment, like the carbon tax, that consumers have to make.
There are three mortgage default insurance providers in Canada. CMHC which is government run, Genworth and Canada Guaranty. All three will insure a high ratio mortgage (a mortgage with less than 20% down). This insurance protects lenders, in the event a borrower ever stopped making payments and defaulted on their mortgage. Although it hasn’t been announced, it is likely all insurers will increase their rates to be inline with CMHC’s new increased rates. Speak to your mortgage specialist for more details.
The answer is simple: Buy now — before the March 17th change to CMHC rates takes effect.
With great inventory and a definite buyers market, this is one more reason you should buy now before the CMHC Mortgage Insurance Rates increase. 2017 is the year to buy — Now we know that February just may well be the month!
Call Dennis at 780-951-3361 or Heather at 780-710-7232 and we’ll help you get there.