Increase in Homeowner Mortgage Loan Insurance
April 10 2015 Posted by
As a result of its annual review of its insurance products and capital requirements, CMHC is increasing its homeowner mortgage loan insurance (MLI) premium rates for loans between 90.01% and 95.00% loan-to-value ratio. The increase reflects CMHC’s target capital requirements which were increased in 2014.
Effective June 1, 2015, the mortgage loan insurance premium rate for loans between 90.01% and 95.00% loan-to-value ratio will increase by approximately 15%. 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. The premium schedule will be as follows:
|Loan-to-Value Ratio||Total Loan Amount||Increase to Loan Amount|
|Up to and including 65.00%||0.60%||0.60%|
|65.01% to 75.00%||0.75%||2.60%|
|75.01% to 80.00%||1.25%||3.15%|
|80.01% to 85.00%||1.80%*||4.00%*|
|85.01% to 90.00%||2.40%*||4.90%*|
|90.01% to 95.00%||3.60%*||5.65%*|
|90.01% to 95.00% (Non-traditional Sources of Equity)||3.85%*||*|
Note: Premiums shown with “*” do not apply for Refinance transactions.
For purchase / new construction loan applications, the premium rate is applied to the Total Loan Amount. For portability and refinance loan applications, the premium is the lesser of:
- The premium rate applied to the Increase to Loan Amount; or
- The premium rate applied to the Total Loan Amount.
Mortgage loan insurance applications for homeowner loans in the 90.01% to 95.00% LTV range that have been submitted to CMHC via emili, for a specific borrower on a specific property, prior to the effective date of June 1, 2015 will be subject to premiums under the existing premium schedule. Applications for homeowner loans in the 90.01% to 95.00% LTV range submitted to CMHC for the first time, for a specific borrower on a specific property, on or after June 1, 2015 will be subject to the revised premium schedule.
The premium increase impacts loans for 1 and 2 unit properties, as the maximum LTV for 3 and 4 unit properties is 90%. There are no changes to premiums for loans where the borrower has made a down payment of 10 percent or more of the purchase price of their home. Also, premiums for CMHC’s portfolio insurance and multi-unit insurance products remain unchanged. There are no changes to the existing premium surcharges.