This week we have two new updates for you!
- CMHC/Genworth Canada premium increases
- News About the Bank of Mom & Dad
CMHC and Genworth Premium Increases
CMHC has released a statement saying they will increase mortgage loan insurance premiums starting March 17th, 2017. Mortgage loan insurance protects lenders in case a buyer defaults on their mortgage. According to CMHC, for an average buyer, this increase will result in an addition of about $5 a month to their monthly mortgage payment. CMHC’s Senior Vice President of Insurance, Steven Mennill said, “We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home.” He also remarked that these changes are being introduced in order to, “preserve competition in the mortgage loan insurance industry” as well as, “contribute to financial stability.”
We believe that although this amount does not seem very significant, it is still a change that directly impacts Canada’s first time buyers, who are more likely to put down a smaller down payment on the purchase of a home.
Also, as of today, we’ve heard news of Genworth Canada, another mortgage insurer, following in CMHC’s steps and raising their premiums as well. Genworth’s President and CEO, Stuart Levings said, “We believe these pricing actions are supportive of the long-term safety and sustainability of the Canadian housing finance system.”
We are expecting Canada Guaranty, the final mortgage insurer, to follow as well, and announce a premium increase very soon.For more information on this increase and on guidelines as related to insurance requirements, please visit:
Insurance Premium Increases
Up to and including 65%
Up to and including 75%
Up to and including 80%
Up to and including 85%
Up to and including 90%
Up to and including 95%
Premium on Total Loan
*Effective March 17th, 2017
The Bank of Mom & Dad
According to First National Financial LP (First National), the number of buyers getting financial help from relatives is increasing. Last year it was reported that, in Ontario, 35% of buyers used the “Bank of Mom and Dad” to help with home ownership costs. Compared to the rest of Canada, Ontario fell somewhere in the middle. Quebec had the highest amount of help from relatives, with about 45% of first time buyers getting help from relatives while the Atlantic provinces saw only about 18% of buyers utilizing this help. British Columbia, surprisingly, sat in second place, at 42%.
First National predicts that “Bank of Mom and Dad” will continue to have another strong year if trends continue as they have been. We think that, in Toronto, at least, as long as housing prices stay up, and inventory stays low, the “Bank of Mom and Dad” will be a large player in the mortgage sphere, as younger buyers try desperately to get into a market that keeps introducing rules that prevent them from entering.
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