Canada Mortgage and Housing Corp makes changes to decrease taxpayer involvement in Canadian Mortgage Insurance Market
The Canada Mortgage and Housing Corp. (CMHC) recently announced last month that their stake of the mortgage insurance business has dropped to about 50%. This is a significant drop from their peak when they controlled 90% of the mortgage insurance market. CMHC’s lead officer stated that they are content with this drop and will remain at this quantity. Whether you’re a current homeowner in Calgary or applying for a real estate mortgage, read on to learn more about this change and how it could affect your mortgage.
CMHC’s statement continued to explain that this decrease in the market share still allows CMHC to maintain its important role in the mortgage industry and advise Canadians as well as the government. Not to mention, with this 50% presence, the CMHC can continue to act as a buffer if another recession hits. By the last quarter of 2014, CMHC insured a total of $543 billion worth of Canadian mortgages. CMHC’s legal cap is $600 billion. With these recent changes, many competitors such as Genworth MI and Canada Guaranty, are honing in on the new available market and continuing to increase their share.
Many of the changes made by the CMHC will affect Calgary mortgages. Some of the changes CMHC implemented include: raised mortgage premiums by 15% in 2014 and so far this year, raised mortgage premiums that had less than 10% down. Federally-regulated banks and lenders are obligated to buy mortgage insurance in Canada when they sell a mortgage to a home buyer who does not have at least a 20% down payment. They almost always pass the cost of insurance premiums to the borrower.
Also, CMHC will no longer insure secondary homes or condo construction financing. Genworth MI had to raise insurance premiums as well. The Crown corporation announced last month that, effective May 30, it is no longer insuring second homes or offering mortgage insurance to self-employed people who don’t have certain documents to prove how much money they make.
Continuing changes within the Calgary housing market and economy make it advisable to consult an expert prior to purchasing a mortgage. If you have any questions regarding your Calgary mortgage or would like to learn more about some of the lowest mortgage rates in Calgary, call expert mortgage broker Tim Lacroix today at 403.648.1541.