Mortgage Insurance Premiums

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Mortgage Insurance Premiums

On February 28th Canada Mortgage & Housing Corporation (CMHC), Canada’s national housing agency, announced it will be increasing its mortgage insurance premiums effective May 1st, 2014.  This insurance, more commonly known as mortgage default insurance, is required when a home buyer places less than 20% down.  On average the increase is expected to be about 15% and CMHC has indicated the impact of these changes would see mortgage payments rise by about $5 per month.  They’ve also confirmed existing mortgages are not affected by this change.

CMHC, which is a Crown corporation, controls approx. 70% of the mortgage default insurance market, with the remainder shared between two private mortgage insurance providers, Genworth MI Canada Inc and Canada Guaranty Mortgage Insurance Company. As yet neither of these companies has commented on this announcement.

On February 18th the BC Government introduced their Balanced Budget 2014 which, amongst other things, forecasts a budget surplus for the next 3 years (2014 – 2017).  Included in this fiscal plan is increased funding for Community Living BC, the Ministry of Children & Family Development, the RCMP and legal aid related services.  Funds were also committed to assist with improvements/upgrades to educational facilities focusing on training in the trades.  A new BC Early Childhood Tax Benefit has also been introduced and this will start in April, 2015.  The budget also committed funds for the development of the LNG industry, and a 2 tier LNG Income Tax on income from this area has also been introduced.

Of special importance to our industry, for those wishing to purchase a new home, the Property Transfer Tax threshold for the First-Time Home Buyers Program has been increased from $425,000 to $475,000. This means that first time home buyers can now buy a home that is up to $475,000 in value and pay no transfer tax on the purchase. This will save a first time buyer up to $7500 in tax that they would pay if they were buying a second home.

Important Reminder Regarding Your Mortgage Renewal

If your mortgage is up for renewal and you are being contacted by your lender to early renew before the maturity date please call or email us before signing the renewal. We are able to give you a quick recap of rates in the market to make sure you aren’t signing for a rate/term that isn’t beneficial for you. Often times your lender will tell you that you only have a very limited time to sign the renewal to pressure you into taking the rate they want. Get in touch with us for a quick 2nd opinion!

If you require any further information regarding this article or any other mortgage matters please contact our office at 604‐556‐3893. Also, as a reminder to anyone looking for a mortgage, we offer 4 month pre-approvals at no cost to you. This means that you can get a rate hold for up to 4 months to protect yourself in case rates rise.

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About the Author:

Alex Kotai
Alex Kotai has worked in the mortgage lending business for over 10 years. His career started at HSBC Bank Canada where he spent most of his time in senior management roles which involved training and managing the sales staff at his branch. After leaving HSBC, Alex decided to open his own mortgage brokerage firm, Your Mortgage Source. Through his company, Alex has access to many lenders across the country with a very expansive list of products.