An update from Jake:
This morning CMHC announced what many were expecting: A slight increase in CMHC premiums for clients who have 5-34.9% down payment.
What is important to note is that the premiums increased for everyone except 35% down applications. Huh? I thought you don't pay any premium at 20-35% down. Typically you didn't. Under the new regime you may have to. That's because some lenders still "sell" this paper to CMHC and pass the cost on to the consumer.
On a typical $500,000 mortgage this will cost you $10-25 give or take more per month. The biggest increases are seen in the higher down payments. Note that 5%ers face a .04% increase whereas 15-19% down payment clients have a 1% increase.
The biggest jump is 20% down clients IF they have to pay the premium, that went up 1.15%! That is huge.
The bottom line is this. This will
1. Bring more media attention to our housing market.
2. Increase the cost of borrowing for everyone (even those with 20% down - if they have to pay it)
3. Increase CMHC's profit
Is this good news? No. Is it major news? No. This is just a reaction to what's happening - CMHC is padding its savings account (forcefully) in anticipation of what may come.
I welcome any questions and comments!
Jake
Jake
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