Effective March 17, 2017, CMHC’s standard mortgage loan insurance premiums will be changing as follows:
| Loan-to-Value Ratio | Standard Premium (Current) | Standard Premium (Effective March 17, 2017) |
| Up to and including 65% | 0.60% | 0.60% |
| Up to and including 75% | 0.75% | 1.70% |
| Up to and including 80% | 1.25% | 2.40% |
| Up to and including 85% | 1.80% | 2.80% |
| Up to and including 90% | 2.40% | 3.10% |
| Up to and including 95% | 3.60% | 4.00% |
| 90.01% to 95% – Non-Traditional Down Payment | 3.85% | 4.50% |
Interesting to note that during the first nine months of 2016
- Nearly 50% of CMHC’s transactional mortgage loan business were for loans of less than $300,000
- Nearly 95% of CMHC’s transactional mortgage loan business were for loans of less than $600,000
- Less than 1% of CMHC’s transactional mortgage loan business were for loans of more than $850,000
As at 30 June 2016, the rate of arrears (loans that are more than 90 days past due over the number of outstanding insured loans) was 0.32% , a decrease from year-end 2015.
Claims paid during the second quarter of 2016 totalled $91 million, an increase of $2 million (2.3%) from the same quarter last year primarily due to the transactional homeowner product.
An interesting comparison is the United States’ delinquency rate for all residential real estate loans. In the first 3 quarters of 2016 it was 4.84%, 4.56% and 4.30% (3rd quarter), respectively.
In the U.S. 3.1% of home owner loans were “seriously delinquent” in March, 2016 (defined as loans that are at least 3 months delinquent or in foreclosure proceedings). It was expected that this rate would be reduced further by the end of 2016.
The seriously delinquent rate was below 2 % in the US from the 1950’s up to the Great Recession (Dec. 2007 to June 2009 – where it rose to 20%!)
However, even the 2% rate is over 6 times higher than CMHC’s 0.32% rate. At this low delinquency rate, it makes one wonder if the 2017 increase in premium rates is just another tax revenue stream.