iMagazine / Spring, 2014 15
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Coldwell Banker Momentum Realty, Brokerage
3860 Dominion Road, Unit #4 P.O. Box 1060
Ridgeway, ON L0S 1S0
289-876-8886
CANADIAN MORTGAGE AND HOUSING CORPORATIONS (CMHC)CHANGES HOW MORTGAGES ARE INSURED.....AGAIN!
ON MAY 1ST, 2014 CMHC, THE GOVERNMENT INSTITUTION RESPONSIBLE FOR INSURING HIGH RATIO MORTGAGES AGAINST DEFAULT, IS SET TO RAISE ITS PREMIUMS. THIS INCREASE WILL SEE THE INSURANCE RATE INCREASE FROM 2.75% TO 3.15% ON MORTGAGES THAT BUYERS TAKE OUT WITH A DOWN PAYMENT OF 5%. WHILE THIS RATE IS NOT A PRE-CLOSING PAYMENT, IT IS A FEE THAT IS CHARGED ON YOUR MORTGAGE AND WILL AFFECT YOUR MONTHLY PAYMENT.
CMHC INSURES APPROXIMATELY 70% OR ALL HIGH RATIO MORTGAGES IN CANADA AND HAS BEEN UNDER PRESSURE TO CHANGE THE WAY THAT MORTGAGES ARE INSURED. FORMER FINANCE MINISTER JIM FLAHERTY ON NUMEROUS OCCASIONS STATED HIS CONCERNS WITH THE DEBT RATIO THAT CANADIANS WERE ACCUMULATING AND HIS CONCERN WITH THE ABILITY TO PAY WHEN INTERESTS RATES INCREASE.
IN THE PAST THE GOVERMENT HAS TAKEN STEPS TO HELP CONTROL THE HOUSING MARKET IN CANADA. THESE STEPS HAVE INCLUDED ELIMINATING THE 40/35/30 YEAR AMMORTIZATION PERIODS FOR MORTGAGES THAT THEY INSURE AND THIS LATEST INCREASE WHICH WILL RAISE APPROXIMATELY $175 MILLION PER YEAR FOR CMHC. WE WILL WATCH AND SEE IF THIS IS THE LAST OF THE CHANGES.....MORE TO COME.