BC HOME Program Explained
January 21, 2017
Interest Rate Update – Spring Showers Bring Lower Rates?
March 1, 2017
Mortgage Insurers Will Be Increasing Premiums
Mortgage insurers announced on January 17th that they will be raising the premiums for all down payments effective March 17th, making this the third increase in premiums since 2014. The increases are due to legislation that require banks and insurance companies to have more capital reserves set aside to allow for mortgages that go into default. Both the banks and the mortgage insurers have tried to fight this one since it makes the banks set aside a significant amount of money that they can’t do anything with. Canada’s top bankers argued that the Canadian Banks are already one of most secure in the world didn’t seem to resonate with the Minister of Finance. The end result translates into higher costs, which get passed onto the borrower in the form of increased premiums and higher interest rates.
The good news is that the premiums will not take effect until March 17th. So providing a borrower has an approval for a purchase, they will be charged the current premium regardless of the closing date. This is good news for buyers of condos that are being built.
Premium Table Effective March 17th: Source Genworth Canada
Though the increase as a percentage is significant, the resulting monthly cost is negligible at about six dollars per month on a mortgage of $300,000 with a five percent downpayment. I’m not expecting this will slow down in First Time Buyers given the new BC HOME Partnership Program which was launched on January 16th.
If your New Year’s resolution was to buy a new home, it would seem the universe is paving a way to make it happen.
