Effective June 1st, 2015, the mortgage loan insurance premium for homebuyers with less than a 10% down payment will increase by approximately 15%.
The premium is charged to the bank by CMHC, but banks almost always pass the premium on to the consumer.
For the average Canadian homebuyer who has less than a 10% down payment, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment. This is not expected to have a material impact on housing markets.
Premiums for homebuyers with a down payment of 10% or more and for CMHC’s portfolio insurance and multi-unit insurance products remain unchanged. The changes do not apply to mortgages currently insured by CMHC.
This means that if you are buying a home and putting a down payment less than 10%, the premium to insure the mortgage increases from 3.15% of the total amount borrowed to 3.60%. This new increase comes into effect June 1, 2015. For a mortgage of $350,000 it is an additional $1,575 increase to the insurance premium or $7.29 monthly increase.
For more information, see CMHC.