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.