CMHC Rate Hike

 

CMHC has announced, in a recent press release, that they are going to be increasing the rates they charge for default insurance on high ratio mortgages. A high ratio mortgage is basically one with a down payment of less that twenty percent.

This rate hike will likely only affect new home and single income buyers who are already making a stretch to buy a home. The rate increase is also higher for those with the smallest 5% downpayment making the threshold for qualifying just a little bit higher.

Loan-to-Value RatioStandard Premium (Current)Standard Premium (Effective May 1st, 2014)
Up to and including 65%0.50%0.60%
Up to and including 75%0.65%0.75%
Up to and including 80%1.00%1.25%
Up to and including 85%1.75%1.80%
Up to and including 90%2.00%2.40%
Up to and including 95%2.75%3.15%
90.01% to 95% – Non-Traditional Down Payment2.90%3.35%

CMHC reviews its premiums on an annual basis and this is the result of their most recent review.

95% Loan-to-Value
Loan Amount$150,000$250,000$350,000$450,000
Current Premium$4,125$6,875$9,625$12,375
New Premium$4,725$7,875$11,025$14,175
Additional Premium$600$1,000$1,400$1,800
Increase to Monthly Mortgage Payment$3.00$4.98$6.99$8.98

Based on a 5 year term @ 3.49% and a 25 year amortization

85% Loan-to-Value
Loan Amount$150,000$250,000$350,000$450,000
Current Premium$2,625$4,375$6,125$7,875
New Premium$2,700$4,500$6,300$8,100
Additional Premium$75$125$175$225
Increase to Monthly Mortgage Payment$0.37$0.62$0.87$1.12

Based on a 5 year term @ 3.49% and a 25 year amortization

The new premiums can be paid up front in one lump sum as before or added to the mortgage. In Ontario the premiums are subject to provincial sales tax which cannot be added to the mortgage and must be paid up front.

See the full CMHC press release here.