Canada’s federal housing agency is raising mortgage insurance premiums as part of a plan to boost its capital reserves.
Canada Mortgage and Housing Corp. said it is raising premiums on the highest-risk mortgages – borrowers who have down payments of less than 10 per cent – by 15 per cent starting June 1.
The changes come as part of a broader plan by the agency, announced last August, to boost its target capital reserves to 220 per cent above the minimum set by the Office of the Superintendent of Financial Institutions, up from 200 per cent previously.
The increases only apply to new mortgages for borrowers with small down payments. Those who put down more than 10 per cent of the purchase price aren’t affected. Premiums will also remain unchanged on CMHC’s portfolio insurance, which lenders take out on bundles of uninsured mortgages so they can securitize them, as well as the agency’s insurance for apartment buildings.