Financial Jungle

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I just learned homebuyers are finally getting some relief in the overheated real estate market. Effectively immediately, buyers with at least 20% down will not longer pay a dime for the CMHC insurance premium.

“We believe that a great number of home buyers will benefit from this change and we are delighted to be able to take a leadership position in making this new option available immediately,” said Cid Palacio, Vice President, BMO Bank of Montreal.

Ms. Palacio noted that based on an average home price of $300,000, a home buyer with only a 20 per cent down payment can now save an average of $2500 in insurance premiums.

To the best of my knowledge, the new fee structure will look as follow. Since the news is so recent, I can’t find official confirmations of these numbers. Not even CMHC’s own website is updated as of this writing. I’ll update this post as I learn more.
[Edit: Just gotten words from my mortgage broker that the only change is the elimination of 20-25% bracket. Everything else stays the same.]

Down Payment	New Fees	Old Fees
21% - 25%	0%	1.00%
16% - 20%	1.75%	1.75%
11% - 15%	2.00%	2.00%
5% - 10%	2.75%	2.75%
Flex Down	2.90%	2.90%

The intention is obviously to alleviate the burden to come up with 25% down, but I’m not convinced that it will be the buyers who reap the benefit. The market has a way of offsetting any money left on the table. I believe the cheaper premiums will drive up demand, causing buyers to bid up prices in the mist of an already tired real estate boom. Consequently, what you gain on the insurance savings, you give back in higher prices. I guess we will have to wait and see.

On a related note, existing home owners can now access up to 80% of their home equity instead of 75%. This is good news for owners looking to tap into their equities for such things as the Smith Manoeuvre or renovations.

“Now, with refinancing at 80 per cent, we’re making an extra five per cent equity available to our clients for their financing needs,” said Catherine Adams, RBC Royal Bank’s vice-president, Home Equity Financing.

Resources

• Down payment rule change won’t alter much
• Banks applaud lowering of mortgage threshold
• BMO Takes Lead
• Mortgage insurance change makes home buying easier: bankers
• 20% down to buy home has just gotten cheaper

If you want to get overview of banking system you can consult many journals or websites relating to banks. The bank charges on the credit card vary from bank to bank. The bank closing information is normally provided on the banks website you can also get other bank related information from there. Now online credit card application forms are available and you can apply for the travel credit card through the websites.