In a bid to bolster its own capital position, the Canada Mortgage and Housing Corp. (CMHC) announced that it will be raising mortgage insurance premiums in the spring.
CMHC announced plans to increase its mortgage loan insurance premiums for homeowner properties and small rental properties, by approximately 15%, on average, for all loan-to-value ranges, effective May 1. The move is designed to boost its capital position, and to contribute to financial stability.
“The higher premiums reflect CMHC’s higher capital targets,” said Steven Mennill, vice-president insurance operations at CMHC. “CMHC’s capital holdings reduce Canadian taxpayers’ exposure to the housing market and contribute to the long term stability of the financial system.”
The organization says that the premium hike will result in an increase of approximately $5 to the monthly mortgage payment for the average Canadian homebuyer requiring CMHC insured financing. “This is not expected to have a material impact on the housing market,” it says.