CMHC to Limit Mortgage Insurance Product Offerings Effective May 30; CMHC Will Stop Offering Mortgage Insurance on Second Homes
This article appeared on CBC.ca on April 26th, 2014. CMHC to limit mortgage insurance product offerings Effective May 30, CMHC will stop offering mortgage insurance on second homes
Canada Mortgage and Housing Corporation will no longer offer mortgage insurance on second homes, the crown corporation said on Friday.
It will also discontinue selling mortgage insurance to self-employed people without third-party income validation. The new limitations mean borrowers will also no longer be able to act as co-borrowers on other applications.
These changes, which will take effect on May 30, are part of the ongoing review of the mortgage loan insurance business. CMHC said self-employed Canadians can still qualify for insured financing with a validation of their income using traditional methods.
As well, the two products will still be available to those who submit requests prior to May 30, regardless of the closing date of the home purchase.
CMHC said these two products account for less than three per cent of its insured business volumes in units. “Given the limited use of these products, their discontinuation is not expected to have a material impact on the housing market,” CMHC said in its release.
The changes come as Canadian home buyers face an increase in mortgage insurance premiums.
In February, CMHC announced it would hike premiums for default insurance by an average of 15 per cent effective May 1. The increase would hit buyers who have a downpayment of less than 20 per cent.