The CMHC has announced that it will no longer be offering coverage for these high end properties.
Among the recent cuts that the Canada Mortgage and Housing Corp has been making, and that have been toping insurance news headlines in the country, is one of the latest that includes the elimination of luxury home mortgage insurance products.
The properties that will no longer be covered will be those that cost $1 million or more.
The CMHC has stated that as of July 31, it will no longer be providing luxury home mortgage insurance for those properties, regardless of whether or not the buyer has made a 20 percent deposit on the purchase. This announcement was made on the heels of another in which it revealed that it would officially no longer be selling the coverage to new condo developers – something that they have not been doing since 2011, but that they have only just now made official.
The removal of luxury home mortgage insurance is one of many risk reducing moves by the corporation.
According to the senior vice president of insurance from the corporation, “CMHC helps Canadians meet their housing needs and contributes to the stability of the housing market and finance system.” He also added that “The changes announced as part of the review ensure that CMHC’s products and services are aligned with these objectives.”
Though this won’t be problematic in some areas, there are some specific markets that will be particularly impacted by this decision. For instance, in Calgary, the MLS market, by the end of May, there had been 359 properties listed for over $1 million. This represented 3 percent of the total figures for sales activity. During that same period, there had been 318 sales of those properties, which also represents 3 percent of the total sales.
In 2013, there had been a record breaking 727 sales of properties for $1 million or more, listed through MLS. Of all of the sales that occurred in that city, that figure represented 3.1 percent. This, according to the figures released by the Calgary Real Estate Board. As of the end of next month, those types of properties will no longer be able to obtain luxury home mortgage insurance coverage through the CMHC.