VANCOUVER (NEWS1130) – If you’re thinking of buying a home and making a small down payment, it’s going to cost you more.
The federal government’s Canada Mortgage and Housing Corp. will increase mortgage insurance premiums as of May 1st.
This affects buyers who put down less than 20 per cent and have to buy insurance that protects the lender.
Put down just five per cent, and you now pay 2.75 per cent in premiums; that will rise to 3.16 per cent.
The new rates affect mortgages for owner-occupied homes, self-employed borrowers and rental properties with one to four units.
On a $400,000 home, the premium will rise by $1,640 to $12,640. Mortgage expert Peter Kinch says the change is driven by Finance Minister Jim Flaherty.
“An increase in premiums, in reality, will have a marginal impact on homeowners. But psychologically, to consumer confidence, it could have the desired effect from the government’s side to slow down what they perceive as an overheated housing market.”
Kinch thinks it might dissuade some homebuyers at the margin.
The new premiums will apply to new mortgages, not those already insured by CMHC.