CMHC to Increase Mortgage Insurance Premiums

OTTAWA, February 28, 2014 — Following the annual review of its insurance products and capital requirements, CMHC will increase its mortgage loan insurance premiums for homeowner and 1 – 4 unit rental properties effective May 1, 2014.
The increase applies to mortgage loan insurance premiums for owner occupied, self-employed and 1-to-4 unit rental properties, including low-ratio refinance premiums. This does not apply to mortgages currently insured by CMHC.
CMHC’s capital management framework is consistent with international practices and Canadian guidelines for mortgage insurers. Increased capital targets are consistent with Canadian and international industry trends and makes the financial system more stable and resilient.
“The higher premiums reflect CMHC’s higher capital targets” said Steven Mennill, CMHC’s Vice-President, Insurance Operations. “CMHC’s capital holdings reduce Canadian taxpayers’ exposure to the housing market and contribute to the long term stability of the financial system.”
For the average Canadian homebuyer requiring CMHC insured financing, 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 the housing market.
Effective May 1^st, CMHC Purchase (owner occupied 1 – 4 unit) mortgage insurance premiums will increase by approximately 15%, on average, for all loan-to-value ranges.

Loan-to-Value Ratio	Standard Premium (Current)	Standard Premium (Effective May 1st, 2014)
Up to and including 65%	0.50%	0.60%
Up to and including 75%	0.65%	0.75%
Up to and including 80%	1.00%	1.25%
Up to and including 85%	1.75%	1.80%
Up to and including 90%	2.00%	2.40%
Up to and including 95%	2.75%	3.15%
90.01% to 95% – Non-Traditional Down Payment	2.90%	3.35%

CMHC reviews its premiums on an annual basis and, going forward, plans to announce decisions on premiums in the first quarter of each year. The homeowner premium increase follows changes CMHC made to its portfolio insurance product earlier this year.
As Canada’s national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable housing solutions that will continue to create vibrant and healthy communities and cities across the country.
For additional highlights please see attached backgrounder and key fact sheet.
Information on this release:
Charles Sauriol, Media Relations
613-748-2799
csauriol@cmhc-schl.gc.ca
Follow CMHC on Twitter @CMHC_ca

Backgrounder

• Mortgage loan insurance helps protect lenders against mortgage default and enables consumers to purchase homes with a minimum down payment of 5% with interest rates comparable to those with a 20% down payment. Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price.
• CMHC mortgage loan insurance premium is calculated as a percentage of the loan based on the loan-to-value ratio. The premium can be paid in a single lump sum but more frequently is added to the mortgage principal and amortized over the life of the mortgage as part of regular mortgage payments.
• CMHC reviews its premiums on an annual basis and has adjusted them several times since being commercialized in 1998. Adjustments have included both increases and decreases to the premiums.
• CMHC’s new premium rates will be effective for new mortgage loan insurance requests submitted on or after May 1, 2014. The current mortgage loan insurance premiums will apply for applications submitted to CMHC prior to May 1, 2014, regardless of the closing date. As is normal practice, complete borrower and property details must be submitted to CMHC when requesting mortgage loan insurance.
• The increase applies to mortgage loan insurance premiums for residential housing of 1-to-4 units. This includes owner occupied, self-employed and 1-to-4 unit rental properties, including low-ratio refinance premiums.
• In 2013, the average CMHC insured loan at 95% loan-to-value was $248,000. Using these figures, the higher premium will result in an increase of approximately $5 to the monthly mortgage payment for the average Canadian homebuyer. This is not expected to have a material impact on the housing market.

95% Loan-to-Value

Loan Amount	$150,000	$250,000	$350,000	$450,000
Current Premium	$4,125	$6,875	$9,625	$12,375
New Premium	$4,725	$7,875	$11,025	$14,175
Additional Premium	$600	$1,000	$1,400	$1,800
Increase to Monthly Mortgage Payment	$3.00	$4.98	$6.99	$8.98

Based on a 5 year term @ 3.49% and a 25 year amortization

*Premiums in Manitoba, Ontario and Quebec are subject to provincial sales tax — the sales tax cannot be added to the loan amount.

85% Loan-to-Value

Loan Amount	$150,000	$250,000	$350,000	$450,000
Current Premium	$2,625	$4,375	$6,125	$7,875
New Premium	$2,700	$4,500	$6,300	$8,100
Additional Premium	$75	$125	$175	$225
Increase to Monthly Mortgage Payment	$0.37	$0.62	$0.87	$1.12

Based on a 5 year term @ 3.49% and a 25 year amortization

*Premiums in Manitoba, Ontario and Quebec are subject to provincial sales tax — the sales tax cannot be added to the loan amount.

SPRING MARKET SUCCESS:
TIPS FOR HOME BUYERS

Spring is finally here and this is a busy time for the real estate industry. Before you start to look for a home, make sure your credit report is in order! We can advise on how to check your credit and remedy any errors or problems. Below are some more tips for new homebuyers to follow to ensure their homebuying journey is a successful and enjoyable one!


Rising Rates? Get Pre-Approved: We can easily arrange a pre-approval. You’ll get a rate hold, which protects you against rising rates for a set period while you house hunt. And whatever the rate trends, a pre-approval will give you a good sense of how much you can afford. We can not stress this enough. Get a pre-approval before you begin house hunting!

Decide on your Priorities: What do you need in a home? What are your wants? Thinking about this carefully before you start to look at properties will help you search much more efficient.

Find a Good Realtor: A good real estate agent working for you exclusively makes all the difference when checking out new neighbourhoods and identifying suitable properties.  We can refer you to amazing real estate agents who specialize in the property you are seeking and which neighbourhood you are planning to live in.

Have the Property Inspected: You need to know exactly what you’re buying. If major repairs are needed, this could impact the purchase price.

And finally…Contact us, your Accredited Mortgage Professionals who are dedicated to not only obtaining the lowest rates, but the BEST product that suits your needs! We love what we do and we are with our clients throughout the life of their mortgages.

Happy House Hunting and Have Fun!

Check out this super cute easy Valentine's Day Recipe!

Valentine Bark

By mamacancook on January 11, 2007

Photo by Rollin in the Dough!

6 Reviews

• 
• Prep Time: 5 mins
• Total Time: 15 mins
• Servings: 10

About This Recipe

"Needing something quick to make for your child classmates or your co workers to think of them for Valentines day? Try Valentine bark--Quick, fast and easy to make."

Ingredients

• 18 ounces white chocolate chips ( a bag and a 1/2)
• 1 cup red heart red cinnamon candies

Directions

1. Pre-heat oven to 150 degrees.
2. Place parchment paper on a cookie sheet (preferably with sides).
3. Sprinkle morsels onto parchment paper.
4. Place in oven until morsels melt (about 5 or so minutes-I don't really time it-I just check on the morsels).
5. Spread morsels evenly over the parchment paper with a spatula.
6. Sprinkle with cinnamon heart candies.
7. Allow to cool (for quick cool I place the pan in the freezer for about 5 minutes).
8. Break apart and divide into baggies if giving for gifts.
9. Makes about 10 snack size baggie servings.

Young savers using TFSAs to purchase homes: survey

Young savers using TFSAs to purchase homes: survey

By Darah Hansen | Pay Day – Mon, 13 Jan, 2014 3:46 PM EST

Younger Canadians, more than ever before, are using their Tax-Free Savings Accounts (TFSAs) to save money to buy their first home.

That’s one of the key findings of a newly published survey by ING Direct. The survey looks specifically at TFSA contributions, asking Canadians of all ages how and why we are saving money.
Retirement continues to be the top reason for using the tax-free program, with 46 per cent of contributors ticking this box.
Not so with younger adults. Nearly 40 per cent of contributors between the ages of 18-34 years see TFSAs as a great way to make the leap into home ownership.
It’s true the program was originally intended to help Canadians shelter their earnings in a bid to live life to the fullest past the age of 65. Yet, the liquidity of a TFSA allows for different savings goals other than those intended.
“It’s often the first place people will go to pull money out,” said Lee Helkie, a Toronto-based financial advisor with Helkie Financial and Insurance Services.
It's this kind of flexibility that is attracting more of the young crowd. Peter Aceto, president and CEO of ING Direct, said most clients, regardless of age, contribute to a TFSA with an eye on retirement.
The bonus?
“If there is a bump in the road, if something unexpected happens in life, you can have access to those funds without there being a penalty,” he said.
But saving is saving and that’s not an attribute we hear very often about Millennials. Isn’t this the “entitled” generation – the folks who get the rap for jumping from job to job and expecting the bank of Mommy and Daddy to bail them out when they get into trouble.
Helkie said she’s encouraged to learn younger Canadians are able to put any money aside.
Given they are among the lowest earners in the country, “the fact they are even thinking about saving is terrific, to be honest,” she said.
But she, like others in the financial field, would like to see more Canadians commit to the program over the long term.
A TFSA is the place “to get the best bang for your buck, and grow some wealth in a tax-free environment,” she said.

Confusion reigns
And yet, many Canadians still don't understand how to harness the power of this savings tool. A report released last week by BMO found TFSAs are increasingly popular with 48 per cent of Canadians contributing to the program, up from 23 per cent in 2012.
But the poll also found that fewer than 20 per cent of Canadians know the annual contribution limit, 10 per cent have over-contributed since opening an account, and only 11 per cent can correctly identify the various types of investments that are eligible to be held within a TFSA.
Larry Moser, vice direct consultant with BMO’s investor line, said confusion over the contribution limits, and assessed penalties if they are exceeded, are keeping people from more fully embracing the program.
“I think there is still a bit of a learning curve when it comes to penalties that can be charged if you over-contribute to a TFSA. If you take money out, you can’t put it in again until the following calendar year,” he said.
The BMO study revealed that although the annual contribution limit is $5,500, TFSA holders plan to contribute an average of $3,625 this year.
When looking at how Canadians are contributing, the ING survey showed a lump-sum deposit one to two times a year is most popular (52 per cent), while 26 per cent contribute to their TFSA on a monthly basis.

Single Ladies Buying Homes

 

Single Ladies Buying Homes

It’s becoming increasingly apparent that a greater number of women are now taking the reins when it comes to home purchases. There’s a growing trend among single women – and, more precisely, professional single women – who are becoming independent homeowners. While many of them may be putting off marriage, they’re not waiting around for Mr. Right before taking the plunge into home ownership.

Women are looking for ways to become financially independent, and investing in real estate and building equity for themselves are ways to invest in their future – building financial security.

Women are taking advantage of historically low interest rates and recognizing home ownership is often more affordable than renting.

Seeking expert advice

One of the amazing things about women looking to invest in real estate is that they’re getting more advice before they make the decision to enter the market. They’re seeking out mortgage experts and real estate agents, and building a plan for the perfect entry into the market. They’re making lists of areas in which they’re interested in purchasing, itemizing amenities they would need in their ideal neighbourhood, ensuring they have all the facts around closing costs and fees associated with making the purchase, and securing a mortgage.

Buying a home is likely one of the largest purchases you’ll ever make in your lifetime, and can feel overwhelming. That’s why working with a professional mortgage agent, real estate agent, home inspector and so on is essential. You’ll be working with these professionals closely – possibly for months – so interactions should feel comfortable, and they should be knowledgeable and responsive even to the smallest question.

The more prepared you are, the smoother the experience will be so do a little research on your own over the Internet to get a good idea of what types of properties and areas are of interest to you. Make a list of questions to ask your mortgage agent or realtor – and keep it on hand so you can add to it as more questions arise.

Interest rates are the lowest they’ve been in history and they have nowhere to go but up. Industry professionals believe that as rates begin to rise, they’ll continue to rise for some time. There has never been a better time for women to make the decision to get into the real estate market to find the perfect place to call home.

Contact me today for a free discrete and informative evaluation of your current mortgage needs @ andreajohnston@mortgagesbyandrea.com . Can you afford to wait?