Canada Housing and Mortgage Corporation (CMHC) announced late last week that effective June 1st, insurance premiums for those who have less than a 10% down payment will rise 45 basis points to 3.6%. CMHC indicated this will only add about $5 per monthly payment.
Does not sound too bad – or does it?
Our very our Shaun Serafini from DLC Mortgage Excellence wrote on Mortgage Broker News:
“What is lost in the $5-per-month analogy is the erosion of a homebuyer’s initial equity position brought by the higher premium. They are now getting less than 1.5 per cent equity in a home despite coming up with five per cent down payment (not a small feat in itself these days). This is almost a full percentage of equity loss from the last wave of premium increases….They will now be further behind the mark in terms of equity from the outset and CMHC doesn’t seem to care too much about that fact.”