Effective March 17, consumers who have locked into this kind of loan within the $245,000 average bracket should expect to see their payments grow by around $5 more monthly, the Calgary Herald reported.
Meanwhile, home owners with mortgages worth $350,000 and $450,000 will experience monthly payment increases of around $7 and $8, respectively.
CMHC officials assured that the changes will not prove to be a hindrance to market activity.
“We do not expect the higher premiums to have a significant impact on the ability of Canadians to buy a home,” CMHC senior vice-president for insurance Steven Mennill said. “Overall, the changes will preserve competition in the mortgage loan insurance industry and contribute to financial stability.”
And despite the impending increases, industry players remained confident about the market’s near-future prospects.
“We do not expect this increase in the CMHC insurance premium to factor into the buying decision for the majority of our [potential] buyers,” according to Kelly Halliday, business development manager for the Calgary-based firm Brookfield Residential.
“To date, we have not been hearing about this as a concern from our buyers. We have experienced a strong start to 2017, a trend we expect to continue through the spring market.”
The Canada Mortgage and Housing Corp. has announced that it will be implementing a hike on the premiums on its insured loans, with the increases calculated based on down payments of between 5 and 9.99 per cent, 25-year amortization, and five-year term at 2.94 per cent.