Both Canada Mortgage and Housing Corp. (CMHC) and
Genworth Canada announced yesterday that they will increase their mortgage insurance premium rates, the latter confirming that its rate changes will be effective March 17, 2017.
The mortgage insurers have explained that the increases follow changes introduced by the government earlier this year which tighten mortgage lending regulations. The new rules are intended to prevent homebuyers from taking on excessive amounts of debt to enter the housing market.
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“We believe this new pricing is prudent and reflects the new regulatory capital framework for mortgage insurers that came into effect on January 1, 2017,” Genworth Canada president and CEO Stuart Levings said in a release. “Genworth Canada remains committed to helping Canadians achieve responsible homeownership. We believe these pricing actions are supportive of the long-term safety and sustainability of the Canadian housing finance system.”
“We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home,” CMHC senior vice-president of insurance Steven Mennill commented in a statement. “Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”
CMHC revealed that it would add approximately $5 to the average monthly mortgage payment of its customers. Genworth estimates that the average first-time homebuyer will see an increase of approximately $6 in their monthly mortgage payment on a $300,000 mortgage amount, assuming a 3% interest rate and a 25-year amortization period.
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