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CMHC is increasing its mortgage insurance premiums for homeowners and 1-4 unit rental properties effective May 1, 2014. Under the current system, a borrower would pay an insurance premium of $6,875 on a $250,000 mortgage. With CMHC’s increase, that same borrower will now pay a premium of $7,875 ($1,000 more).
On a typical 25 year mortgage, with an interest rate of 3.5%, the increased premium results in about $5 more a month.
The change will only apply to mortgages underwritten after May 1, 2014 and it will apply to all homeowner business from that day forward as a result of increasing capital targets. Premiums will rise about 15 per cent, according to CMHC, though it isn’t expected to have a major effect on the housing market.
Click here to read full article on the CMHC website.