CMHC continues to tweak the mortgage market in Canada.  Today they announced a slight increase in the premiums they charge on mortgages.  The increase is about 15% on average.  You can see the changes here.

This change does not affect any current CMHC insured mortgages.  It only applies to new mortgages “approved” after May 1st.  Your closing date doesn’t matter.

While 15% sounds like a lot, in the large scale of home financing, it’s not really a big change.  Here’s a little perspective on a typcial, average $300,000 mortgage in this market.

– Your monthly payment increases by about $6 per month.

– You will pay about $550 in added interest over the 25 year life of your mortage (assuming you take that long to pay it off).

– The net total cost, including the premium and interest is about $1,750.

Taking that into account, it hardly justifies rushing to find the “perfect home” before May 1st.  That home just became 0.5% more expensive.  That’s really an insignificant amount for most home buyers.  Here’s some added perspective.  Saving as little as .10% on your interest rate, saves you almost 3 times that amount.

All of those numbers are based on the higest premium level (those buyers purchasing with only 5% down).  If you’ve got 10%, or 15% down, the added cost is even more insignificant.  And if you’re buying with 20% down, today’s annoucement lifely won’t affect you at all.

So all things considered, the 2 day notice of a “big announcement”, will not have a significant effect on our housing market.

Doug Neufeld www.dougneufeld.com