Hat tip to Allison Lampert of The Gazette for this.
Showing posts with label CMHC. Show all posts
Showing posts with label CMHC. Show all posts
Friday, February 28, 2014
Calculating Your Mortgage Insurance Premium
Here's an excellent video from RateHub that explains how mortgage insurance is calculated. Viewer beware, these are not Montreal prices they are playing with!
Hat tip to Allison Lampert of The Gazette for this.
Hat tip to Allison Lampert of The Gazette for this.
Canada Mortgage and Housing Corp. to Increase Mortgage Insurance Premiums May 1
Anyone buying a home in Canada and who has less than 20 per cent of the purchase priceto use as a down payment is going to see the cost of that purchase increase a little bit come May 1st, 2014.
The increase will happen because the Canada Mortgage and Housing Corp., a federal agency that insures all so-called high ratio mortgages, is raising its premiums by 15 per cent. It is the CMHC's first hike since the late 1990s.
CMHC mortgage insurance allows those with a modest down payment to get their foot in the home ownership door. Depending on the size of a buyer's down payment, the insurance premium currently ranges from 0.5 per cent and 2.75 per cent of the purchase price. On a $250,000 purchase, that translated to a $6,875 premium paid down over the life of the mortgage.
Under the new fee structure, the premium will rise to a maximum of $7,875, an added cost of about $5 per month on the typical 25-year, $250,000 mortgage. (We always use the $250,000 example but the average cost of a Montreal single-family home is actually close to $291,000. Let's not be too picky.)
On its own, the rate increase is not a killer, but it does come a 18 months after CMHC tightened mortgage rules so that buyers can spread their mortgage over a maximum of 25 years instead of 30. That sidelined some first-timers who were scared off by the prospect of seeing their mortgage payments climb by more than $150 a month.Here comes another $5.
The CMHC has a handy chart showing the different cost increases.
The rate change will not affect anyone who already has a CMHC-backed mortgage, only new business. The effects won't be as dramatic as the change to amortization rules instituted in June, 2012. Still, every time the feds tinker, the market tightens just a bit.
The increase will happen because the Canada Mortgage and Housing Corp., a federal agency that insures all so-called high ratio mortgages, is raising its premiums by 15 per cent. It is the CMHC's first hike since the late 1990s.
CMHC mortgage insurance allows those with a modest down payment to get their foot in the home ownership door. Depending on the size of a buyer's down payment, the insurance premium currently ranges from 0.5 per cent and 2.75 per cent of the purchase price. On a $250,000 purchase, that translated to a $6,875 premium paid down over the life of the mortgage.
Under the new fee structure, the premium will rise to a maximum of $7,875, an added cost of about $5 per month on the typical 25-year, $250,000 mortgage. (We always use the $250,000 example but the average cost of a Montreal single-family home is actually close to $291,000. Let's not be too picky.)
On its own, the rate increase is not a killer, but it does come a 18 months after CMHC tightened mortgage rules so that buyers can spread their mortgage over a maximum of 25 years instead of 30. That sidelined some first-timers who were scared off by the prospect of seeing their mortgage payments climb by more than $150 a month.Here comes another $5.
The CMHC has a handy chart showing the different cost increases.
The rate change will not affect anyone who already has a CMHC-backed mortgage, only new business. The effects won't be as dramatic as the change to amortization rules instituted in June, 2012. Still, every time the feds tinker, the market tightens just a bit.
Monday, July 9, 2012
Mortgage Rules Change Today
Starting today, borrowers face a new set of rules when it comes to mortgage lending in Canada.
The changes will have particular impact on younger/first-time buyers and could make it harder and/or more expensive to buy that first home.
As of today, buyers with less than a conventional 20-per-cent down payment will no longer be able to spread their mortgages over 30 years. The amortization period is being shrunk to 25 years. This is the measure that has been making headlines since June when the new rules were announced by Finance minister Jim Flaherty. Funny thing is, the 25-year mortgage was the norm until relatively recently. The 30-year mortgage was introduced to stimulate the housing sector. Now that the job is done, we are reverting to the old rules.
If you have 20 per cent to put down and thus don't need the Canada Mortgage and Housing Corp. to insure your mortgage, you can still get a 30-year term.
The second change to the mortgage game is that home owners will no longer be able to take quite as much equity out of their homes. Starting today, owners will be able to refinance up to 80 per cent of the value of their homes, down from 85 per cent.
Flaherty put the new measures in place to A) cool key overheated housing markets. B) to discourage Canadians from taking on too much debt C) to persuade homeowners to stop treating their houses like ATM machines and pay off those pesky mortgages.
Flaherty announced the new measures largely in response to overheating in the Toronto market. Not everyone thinks they were the best approach.
In an interview with The Globe and Mail, Philip Soper, the head of Royal LePage, said that Flaherty used a hammer, when a fly swatter might have done the job.
“The market is clearly cooling on a national basis, and I’m concerned that what is essentially a Toronto problem is being attacked with a blunt instrument that’s going to hurt the housing market nationwide,”
Maybe so. Mortgage industry insiders say the tightening will have the same effect as a one-per-cent interest rate hike. The government says the more stringent requirements will have an impact on about 5 per cent of new buyers, forcing them to the sidelines until either they save more or have higher paying jobs.
Some think the tighter lending rules will result in a market slowdown that would make it easier for young/first-time buyers to get into the market. Guess we'll see.
Several of my buyer clients have asked me what the mortgage rules will mean. I'm not convinced it will have much impact in Montreal. I don't see too many buyers opting for 30-year mortgages. I think I've had two clients over the course of the last two years. In Greater Toronto, some 40 per-cent of first-timers opt for 30-year mortgages. Different market, different circumstances. If clients ask my opinion, I encourage them to put down as much of a down payment as possible and to opt for as short an amortization period as possible. Call me crazy but I don't think it would be a terrible thing if marginal buyers were forced to the sidelines.
One last point. As of today, the CMHC will no longer insure mortgages priced above $1 million. It boggles my mind that the federal government was up until now insuring houses worth that much. Whatever happened to buying within your means. scraping and skimping to buy that first home? Seems to me that a $1-million home ought to be a move-up property. It would be in Montreal, but I suppose that in hotspots like Toronto and Vancouver, that kinda cash will get you a crack house or shack.
Check out Crack Shack or Mansion and you'll see what I mean.
The changes will have particular impact on younger/first-time buyers and could make it harder and/or more expensive to buy that first home.
As of today, buyers with less than a conventional 20-per-cent down payment will no longer be able to spread their mortgages over 30 years. The amortization period is being shrunk to 25 years. This is the measure that has been making headlines since June when the new rules were announced by Finance minister Jim Flaherty. Funny thing is, the 25-year mortgage was the norm until relatively recently. The 30-year mortgage was introduced to stimulate the housing sector. Now that the job is done, we are reverting to the old rules.
If you have 20 per cent to put down and thus don't need the Canada Mortgage and Housing Corp. to insure your mortgage, you can still get a 30-year term.
The second change to the mortgage game is that home owners will no longer be able to take quite as much equity out of their homes. Starting today, owners will be able to refinance up to 80 per cent of the value of their homes, down from 85 per cent.
Flaherty put the new measures in place to A) cool key overheated housing markets. B) to discourage Canadians from taking on too much debt C) to persuade homeowners to stop treating their houses like ATM machines and pay off those pesky mortgages.
Flaherty announced the new measures largely in response to overheating in the Toronto market. Not everyone thinks they were the best approach.
In an interview with The Globe and Mail, Philip Soper, the head of Royal LePage, said that Flaherty used a hammer, when a fly swatter might have done the job.
“The market is clearly cooling on a national basis, and I’m concerned that what is essentially a Toronto problem is being attacked with a blunt instrument that’s going to hurt the housing market nationwide,”
Maybe so. Mortgage industry insiders say the tightening will have the same effect as a one-per-cent interest rate hike. The government says the more stringent requirements will have an impact on about 5 per cent of new buyers, forcing them to the sidelines until either they save more or have higher paying jobs.
Some think the tighter lending rules will result in a market slowdown that would make it easier for young/first-time buyers to get into the market. Guess we'll see.
Several of my buyer clients have asked me what the mortgage rules will mean. I'm not convinced it will have much impact in Montreal. I don't see too many buyers opting for 30-year mortgages. I think I've had two clients over the course of the last two years. In Greater Toronto, some 40 per-cent of first-timers opt for 30-year mortgages. Different market, different circumstances. If clients ask my opinion, I encourage them to put down as much of a down payment as possible and to opt for as short an amortization period as possible. Call me crazy but I don't think it would be a terrible thing if marginal buyers were forced to the sidelines.
One last point. As of today, the CMHC will no longer insure mortgages priced above $1 million. It boggles my mind that the federal government was up until now insuring houses worth that much. Whatever happened to buying within your means. scraping and skimping to buy that first home? Seems to me that a $1-million home ought to be a move-up property. It would be in Montreal, but I suppose that in hotspots like Toronto and Vancouver, that kinda cash will get you a crack house or shack.
Check out Crack Shack or Mansion and you'll see what I mean.
Thursday, December 9, 2010
Montreal Rental Market Stable
Good news for rental property owners from Canada Mortgage and Housing Corp. today.
CMHC reports that on-island rental market remains stable with an overall vacancy rate of 2.7 per cent. That compares to 2.6 per cent a year ago.
Economic and demographic factors helped propel more people into home ownership over the course of the year but that didn't mean a loosening of the rental market. A relatively healthy job-creation picture for workers in the 15-24 age bracket meant more new households were formed in the Montreal area this year. That trend smacked up against a slowdown in rental construction. There were only 2,721 rental starts (foundations poured) in 2010. That compared to 3,672 last year.
According to Bertrand Recher, the CMHC economist who wrote the report, the rental market was tightest in central Montreal neighborhoods like the Plateau, Rosemont, Villeray, Verdun and central Ville Marie. In those areas, the real vacancy rate was closer to 2 per cent.
The vacancy rate is lowest in apartments with three or more bedrooms, 2.1 per cent. The rate for apartments with 2 bedrooms is 2.3 per cent. For bachelor apartments and one-bedrooms, the vacancy rate is 3.8 per cent and 3.1 per cent respectively.
CMHC promises to send out a zone-by-zone breakdown of vacancy rates and average rents later in the day.
CMHC reports that on-island rental market remains stable with an overall vacancy rate of 2.7 per cent. That compares to 2.6 per cent a year ago.
Economic and demographic factors helped propel more people into home ownership over the course of the year but that didn't mean a loosening of the rental market. A relatively healthy job-creation picture for workers in the 15-24 age bracket meant more new households were formed in the Montreal area this year. That trend smacked up against a slowdown in rental construction. There were only 2,721 rental starts (foundations poured) in 2010. That compared to 3,672 last year.
According to Bertrand Recher, the CMHC economist who wrote the report, the rental market was tightest in central Montreal neighborhoods like the Plateau, Rosemont, Villeray, Verdun and central Ville Marie. In those areas, the real vacancy rate was closer to 2 per cent.
The vacancy rate is lowest in apartments with three or more bedrooms, 2.1 per cent. The rate for apartments with 2 bedrooms is 2.3 per cent. For bachelor apartments and one-bedrooms, the vacancy rate is 3.8 per cent and 3.1 per cent respectively.
CMHC promises to send out a zone-by-zone breakdown of vacancy rates and average rents later in the day.
Wednesday, April 8, 2009
Residential Construction Declined in March
Foundations were poured for 1,805 residential units in metropolitan Montreal in March, a 12-per-cent decline compared to the same month a year ago, according to Canada Mortgage and Housing Corp.
That was improvement over February, when the number of starts dropped by 63 per cent.
CMHC attributed the decline to two factors, the tighter economic picture and a growing inventory of resales houses on the market. New home construction typically picks up when the resale market tightens.
The drop in construction was felt pretty much across the board, with freehold home starts down by 35 per cent, condo starts down 30 per cent and rental starts down 26 per cent.
The one category that bucked the trend was semi-detached and row housing, which rose by 40 per cent in March,, a modest gain of 76 new units.
The decline in new construction is good news for both vendors and agents. Less new inventory helps focus buyers' attention on the existing home market, where there are still plenty of good deals to be had, anyway.
That was improvement over February, when the number of starts dropped by 63 per cent.
CMHC attributed the decline to two factors, the tighter economic picture and a growing inventory of resales houses on the market. New home construction typically picks up when the resale market tightens.
The drop in construction was felt pretty much across the board, with freehold home starts down by 35 per cent, condo starts down 30 per cent and rental starts down 26 per cent.
The one category that bucked the trend was semi-detached and row housing, which rose by 40 per cent in March,, a modest gain of 76 new units.
The decline in new construction is good news for both vendors and agents. Less new inventory helps focus buyers' attention on the existing home market, where there are still plenty of good deals to be had, anyway.
Monday, March 23, 2009
CMHC and the Big Banks Tackle Mortgage Default Worries Head On
Canada Mortgage and Housing Corp. and the country's biggest lenders are launching a campaign aimed at heading off an increase in mortgage defaults.
They will urge mortgage holders to approach their lenders about easing the terms of their mortgages before financial problems get out of hand.
The campaign is a reaction to a rising number of mortgage defaults in this country - though the problem is minuscule compared to what's going on in the U.S..
According to the latest figures from the Canadian Bankers Association, as of last October .29 per cent of Canadian mortgages were in arrears, up from 0.26 per cent a year earlier. To be in arrears, mortgage payments must be 90 days late.
The Canadian situation stands in stark contrast to the U.S., where Washington has introduced a $75-billion mortgage bailout that offers lenders incentives to modify existing loan agreements and standardizes the terms for loan modifications. As many as 6 million U.S. homeowners are at risk of defaulting on their mortgages in the next few years.
Canada wants to nip the problem in the bud. Borrowers are being encouraged to talk to their lenders to find alternatives such as skipping payments, tacking late payments onto the balance of the loan, extending the term or amortization amount or locking into a fixed rate.
They will urge mortgage holders to approach their lenders about easing the terms of their mortgages before financial problems get out of hand.
The campaign is a reaction to a rising number of mortgage defaults in this country - though the problem is minuscule compared to what's going on in the U.S..
According to the latest figures from the Canadian Bankers Association, as of last October .29 per cent of Canadian mortgages were in arrears, up from 0.26 per cent a year earlier. To be in arrears, mortgage payments must be 90 days late.
The Canadian situation stands in stark contrast to the U.S., where Washington has introduced a $75-billion mortgage bailout that offers lenders incentives to modify existing loan agreements and standardizes the terms for loan modifications. As many as 6 million U.S. homeowners are at risk of defaulting on their mortgages in the next few years.
Canada wants to nip the problem in the bud. Borrowers are being encouraged to talk to their lenders to find alternatives such as skipping payments, tacking late payments onto the balance of the loan, extending the term or amortization amount or locking into a fixed rate.
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