It took Canada’s second largest mortgage insurer about 12 hours to match premium hikes to mortgage default insurance announced Tuesday by Canada Mortgage and Housing Corp, the Crown corporation that controls a majority of the market.
Genworth Canada said late Tuesday that it would be increasing its transactional mortgage insurance premium rates for homebuyers, essentially duplicating the increases brought in by CMHC. The increase in premiums depends on the downpayment — they are rising more dramatically for loans with higher downpayments — but the premium for consumers with a loan-to-value ratio up to and including 95 per cent, will rise to four per cent from the current 3.6 per cent on March 17 for both companies.
“We believe this new pricing is prudent and reflects the new regulatory capital framework for mortgage insurers that came into effect onJanuary 1, 2017,” saidStuart Levings, President and CEO of Genworth Canada. “Genworth Canada remains committed to helping Canadians achieve responsible homeownership. We believe these pricing actions are supportive of the long-term safety and sustainability of the Canadian housing finance system.”
The company said it doesn’t expect the changes to have a “significant impact” on affordability for homebuyers. It noted a typical first-time homebuyer making a 5 per cent down payment would face about $6in their monthly mortgage payment on a$300,000mortgage amount, assuming a three per cent interest rate and a 25-year amortization period.
Canada Guaranty, the third largest private insurer in the country said it continues to study the changes announced by CMHC. “Price adjustments are reasonable given increase in regulatory capital requirements and supports a healthy mortgage insurance industry,” said Andy Charles, the chief executive of the company.