Mortgage insurer Genworth follows CMHC in raising premium
Genworth Canada says it will be increasing the premium for some of its mortgage insurance, starting June 1, matching a move announced last week by Canada Mortgage and Housing Corp.
Upcoming homebuyer's with less than 10% for down payment should expect a 15 per cent increase on the mortgage insurance premium. Mortgage insurance provides protection for lenders who provide money to home buyers and owners. The premium is determined by multiple factors, including how much is borrowed and the value of the property.
The insurers have come out saying the higher premiums won't have a major impact on home affordability, but the higher pricing will help support the long-term health of Canada's system for financing housing. The new rate for a loan-to-value ratio up to 95 per cent is 3.6%, up from 3.15%.
Genworth said its decision to raise premiums was independent of CMHC's announcements last week, and that neither of the mortgage insurers had any discussions with each other leading up to the changes.
CMHC was the first to raise its premium last week. CMHC claims that the premium in this category amounts to about $5 on a monthly mortgage. CMHC has also mentioned that these changes do not apply to mortgages currently insured by CMHC.
The increase from CMHC follows increases the Crown corporation instituted last year, heading into the busy spring market. Premiums jumped from 2.75% to 3.15% in 2014, and other private institutions quickly followed.