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CMHC premiums on multi-unit properties will be increasing effective June 19th, 2023. To take advantage of the current lower premiums, the loan insurance application must be submitted no later than June 18th, 2023. This comes after CMHC’s annual pricing review which determined that CMHC has been taking on increased risk across its product offerings.
How much is the increase? For Standard Rental Housing, Retirement & Student Housing, the increase is 0.85% for loans where EGI is met and has stabilized for 12 months and 0.75% for loans where EGI is not met. For example, a 75% loan-to-value CMHC ‘standard rental’ insured loan premium (with EGI met) is moving from 2.50% to 3.35%.
For the MLI Select program, which has been extremely popular, the increase is more significant - 1.55%. For example, a 95% loan-to-cost construction loan insurance premium is currently 1.25% and is increasing to 2.80%. CMHC application fees are unchanged.
In addition to the increase to multi-unit mortgage loan insurance premiums, CMHC is also making changes to their risk management approach on multi-unit rental properties. This change is partly due to the strong take up of mortgage loan insurance products for multi-unit rental properties, these products also come with increased risk to CMHC. We are told, effective immediately, CMHC will be reviewing applications using ‘a more prudent risk management approach’. More specifically, CMHC will be trying to balance market risk and elevated rent up risk in relation to the social outcomes. This may result in not all features of multi-unit mortgage loan insurance products being available, or additional mitigation measures may be applied.
For information on these program changes and application timelines, please contact a Citifund broker.
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