Uncle Jim may ask CMHC to dig more money out of your pocket

Mortgage insurer CMHC primes market for announcement

Canada Mortgage and Housing Corp., the Crown corporation that Finance Minister Jim Flaherty has been seeking to rein in, says it will be making an announcement later this week.

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The mortgage insurer, which appointed former investment banker Evan Siddall as its new chief executive officer at the start of the year, would not comment on the substance of the announcement. The Globe and Mail reported in December that there has been pressure on CMHC to raise its premiums, a move that could add to the cost of a home for some buyers. CMHC has not raised its premiums since the late 1990s, and actually lowered them between 2003 and 2005.

Mortgage insurance is mandatory in Canada for buyers whose down payment is less than 20 per cent. The insurance covers the lender, or bank, in case the homeowner defaults.

While premiums are technically paid by the lenders, the cost is passed along to borrowers. Premiums vary depending on the size of the down payment and are calculated as a percentage of the mortgage. The smaller the down payment, the higher the premium. For example, the standard premium is 1 per cent for a mortgage with a loan-to-value ratio of 80 per cent, and 2.75 per cent for a mortgage with a loan-to-value ratio of 95 per cent.

CMHC has two private-sector rivals: Genworth MI Canada Inc., and Canada Guaranty Mortgage Insurance Co. They tend to match CMHC’s prices because the Crown corporation is by far the biggest competitor. Industry sources say the private-sector players have been reluctant to raise prices on their own, for fear of losing business, but they have told the federal government that they would like to see CMHC raise its premiums.

The private-sector players argue that higher premiums are overdue because mortgage insurers have been required to bolster the amount of capital that they set aside in recent years, and flat prices coupled with higher capital requirements have put pressure on profit growth.

CMHC earned almost $1.28-billion in the first nine months of 2013.

Read more @ The Globe and Mail

Meanwhile, buy …

The first thing I thought of when I saw this 3+1 bedroom, 4 bathroom house on a 20.71 x 100 foot lot in The Pocket was of the house at 319 Arlington Avenue in Humewood….

That house is being sold only partly finished with the opportunity to personalize it.  But since it was listed in December for $1,149,800, only to have a price drop the follwing month to $999,800.

Like that house, this house (according to a reader, though I can’t find it) was also listed at $1,150,000 just over a week ago.

It was listed at $399,900 in October 2012.

Unlike the Arlington house, this house is ‘finished’, but there is a LOT more than could have been done.  Like maybe some built-ins on either side of the fireplace to match the wood kitchen cabinets perhaps.  Or something.

Plus, all the finishes are VERY simple, but if that’s your look, this place is perfect.

Unfortunately, this place backs onto the TTC yard…

Umm..

Which is probably why they dropped the price.

Sure, as another reader pointed out, 20 Dawson Avenue which is also in The Pocket sold for $1,010,000 last January (which I still don’t get)…

But it didn’t back onto the TTC yard.  I am guessing that would be SUPER noisy….and probably SUPER noisy reeeeallly early in the morning.

The new price for this house is $998,000.

This will have to drop again.

I am thinking closer to $875,000….maybe $895,000.

 

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