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17 Jan

CMHC Fee Increases and the Impact on the BC Home Partnership Program (down payment loans)

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Posted by: Adam Hawryluk

Good evening all,

CMHC just announced their mortgage insurance premiums are going up for borrowers across the board as of March 17th, 2017. That means higher costs to consumers, and if you look at the bottom line where it says “90.01% to 95%- Non-Traditional Down Payment”, that’s the category that the new BC Government down payment loan holders will fall under (see the chart below).

So to use the same numbers as my previous blog post on this topic (LINK), on a house purchase of $400,000, you’ve saved $10,000 (2.5%) for a down payment and the governement loans you the other $10,000 (2.5%) you need to make it to a full 5% down payment. As of March 17th 2017 (you need an accepted offer on a house by that date, not just a pre-approval) the CMHC fee on that purchase goes up from $14,630 to $17,100, a difference of $2,470. That’s an extra $11.30 per payment. It’s not a huge amount monthly, but it’s not nothing.

CMHC’s rational is that because of new rules imposed in October by OFSI (the federal regulator of banks and insurers), they need more money in their bank accounts to back the insurance coverage they’re offering. I think that is fair, for them to ensure their butts are covered (especially since they’re a crown corporation and we taxpayers are really on the hook if they fail to do so), but this is frustrating because after the federal government changed the qualifying rules in October of 2016, the Finance Minister Bill Morneau said he wasn’t currently planning to announce any other measures aimed at cooling the market. And yet here we are, with another fan to the market which will fall disproportionately on first time home buyers.

SERENETY NOW!

For more information, don’t hesitate to reach out.

Adam Hawryluk
DLC Canadian Mortgage Experts
250-619-5274
adam@cmexp.com