Buying with less than 20% down payment? You will pay more for your insurance now.

Canada Mortgage and Housing Corporation (CMHC) announced an increase to their default insurance rates recently. Anyone purchasing their home with less than a 20% down payment is required to have their mortgage insured against default. 

The premium charged for owner occupied 1 – 4 unit mortgage will increase by approximately 15%, on average, for all loan-to-value ranges.

Loan-to-Value Ratio	Standard Premium (Current)	Standard Premium (Effective May 1st, 2014)
Up to and including 65%	0.50%	0.60%
Up to and including 75%	0.65%	0.75%
Up to and including 80%	1.00%	1.25%
Up to and including 85%	1.75%	1.80%
Up to and including 90%	2.00%	2.40%
Up to and including 95%	2.75%	3.15%
90.01% to 95% – Non-Traditional Down Payment	2.90%	3.35%

What this means is that on a $450,000 mortgage, the fee CMHC charges up front and often tacked onto the mortgage, would rise from $12,375 to $14,175 which will increase in your monthly mortgage payment.

CMHC controls about 70% of the mortgage default insurance market in Canada with private players Genworth Canada and Canada Guaranty holding the rest.

Genworth announced it too would raise premiums across the board by an average of 15%. Its increases will take effect May 1 too.
The good news is that this doesn't come into effect until May 1, 2014. As long as you arrange your mortgage prior to May 1, 2014 (closing date can be after May 1, 2014) you won’t be subject to this increase.