The CMHC Stops Insuring Million-Dollar Home Mortgages

(June 08, 2014 )

As our real estate team forecast in 2013, The Canada Mortgage and Housing Corp. (CMHC) has announced it will no longer offer mortgage insurance for homes that cost $1 Million or more, starting July 31, 2014 even if the buyer has made a deposit of 20 per cent (%) or more. 

Our in house real estate analyst, Robert Pybus, had spoken to the issue of the Canadian federal government potentially shopping the idea of either seriously reducing the governments exposure to a sub prime mortgage or over valued mortgage market by changing many of the CMHC's rules or privatizing the insurance agency.

It's a step further than rules introduced two years ago when then finance minister Jim Flaherty announced that CMHC would stop insuring mortgages on homes worth $1 million or more if the buyer borrowed more than 80 per cent of the value.

The Crown corporation stated the changes announced Friday would have affected only about three per cent of the mortgage insurance it provided last year for individual homes. Our real estate team questions that number as well as the many changes the agency and government have made to directly affect the ability to purchase British Columbia and Canadian real estate of all kinds. Historically, government red tape, costs, control and interference more often result in negative impact on any private sector industry or business.

The CMHC also announced it will no longer insure loans that are used to finance construction of multi-unit condominium projects, effective immediately.

It says that type of insurance product was introduced in 2010, but CMHC hasn't provided any to builders since 2011.

CMHC also says its mortgage loan insurance for condo buyers isn't affected by the change which once again plainly shows our real estate team there is unabated social engineering at all levels of government to affect and control how and where Canadians live and invest.

If you have any real estate industry questions or concerns don't hesitate to call or email our team members at The BC Home Hunter Group and subscribe to our weekly Truth About Real Estate newsletter.

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