April 2, 2015

Re: Increase in Homeowner Mortgage Loan Insurance Premiums in the 90.01% to 95.00%

loan-to-value range – Effective June 1, 2015

As a result of its annual review of its insurance products and capital requirements, CMHC is

increasing its homeowner mortgage loan insurance (MLI) premium rates for loans between

90.01% and 95.00% loan-to-value ratio. The increase reflects CMHC’s target capital

requirements which were increased in 2014.

Effective June 1, 2015, the mortgage loan insurance premium rate for loans between 90.01% and

95.00% loan-to-value ratio will increase by approximately 15%. For the average Canadian

homebuyer who has less than a 10% down payment, the higher premium will result in an

increase of approximately $5 to their monthly mortgage payment. This is not expected to have a

material impact on housing markets. The premium schedule will be as follows:

Standard

Loan-to-Value Ratio Total Loan

Amount

Increase to

Loan Amount

Up to and including 65.00% 0.60% 0.60%

65.01% to 75.00% 0.75% 2.60%

75.01% to 80.00% 1.25% 3.15%

80.01% to 85.00% 1.80%* 4.00%*

85.01% to 90.00% 2.40%* 4.90%*

90.01% to 95.00% 3.60%* 5.65%*

90.01% to 95.00%

(Non-traditional Sources of Equity) 3.85%* *

Note: Premiums shown with “*” do not apply for Refinance transactions.

For purchase / new construction loan applications, the premium rate is applied to the Total Loan

Amount. For portability and refinance loan applications, the premium is the lesser of:

a. The premium rate applied to the Increase to Loan Amount; or

b. The premium rate applied to the Total Loan Amount.

Mortgage loan insurance applications for homeowner loans in the 90.01% to 95.00% LTV range

that have been submitted to CMHC via emili, for a specific borrower on a specific property, prior

to the effective date of June 1, 2015 will be subject to premiums under the existing premium

schedule. Applications for homeowner loans in the 90.01% to 95.00% LTV range submitted to

CMHC for the first time, for a specific borrower on a specific property, on or after June 1, 2015

will be subject to the revised premium schedule.

The premium increase impacts loans for 1 and 2 unit properties, as the maximum LTV for 3 and

4 unit properties is 90%. There are no changes to premiums for loans where the borrower has

made a down payment of 10 percent or more of the purchase price of their home. Also,

premiums for CMHC’s portfolio insurance and multi-unit insurance products remain unchanged.

There are no changes to the existing premium surcharges.

CMHC has developed its capital management framework by applying OSFI guidelines for

mortgage insurers as well as global regulatory practices. CMHC’s increased capital holdings

create a larger buffer against potential losses, reducing Canadian taxpayers’ exposure to the

housing market, and helping to ensure long term stability of the financial system.

CMHC also contributes to the stability of Canada’s housing finance system, including housing

markets, by providing qualified Canadians in all parts of the country with access to a range of

housing finance options in both good and bad economic times.

To help you respond to consumer inquiries, CMHC has information available on the new

premiums at www.cmhc.ca.

Sincerely,

Fatima M Barros, CPA,CGA

Regional Vice-President

Canada Mortgage and Housing Corporation (CMHC)