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All you need to know about the new mortgage insurance premiums effective May1st, 2014
Questions and Answers
1. What if a purchase and sale agreement is signed prior to May 1st, 2014 and the mortgage insurance application is submitted on or after May 1st, 2014?
In this scenario, the new premium rates would apply. Even though the purchase and sale agreement was signed before May 1st, 2014, the mortgage insurance application was received by Genworth after the effective date of the new premium rate price change, and therefore the new rates apply.
2. What if I have signed a purchase and sale agreement and I require mortgage insurance, however, the closing date is after May 1st, 2014, will the current premiums still apply?
As long as the application was submitted to Genworth prior to May 1st 2014, the current premiums will still apply.
3. I have a mortgage pre-approval from a lender from before May 1st, 2014, will I still be eligible for the current premium rates if I dont have a signed agreement of purchase until on or after May 1st, 2014?
All applications for mortgage insurance must be submitted prior to May 1st, 2014 with a binding purchase and sale agreement in place to be eligible for current premium rates.
4. If I bought a new construction property (i.e. condo) that is not expected to be built for another two years, will the new premium rates apply?
As long as the application for mortgage insurance was submitted to Genworth prior to May 1st, 2014 and the closing date is prior to the expiry of the Genworth commitment, then current premiums will apply.
5. If I have a Progress Draw mortgage that has been submitted to Genworth prior to May 1st 2014 and the draws are occurring on or after the May 1st, 2014, will the new premium rates be charged?
As long as the application for mortgage insurance was submitted to Genworth prior to the May 1st, 2014, the current premium rates will be charged.
6. What if I am thinking about refinancing my home on or after May 1st, 2014, will I be eligible for the current premium rates?
To be eligible for the current premiums, applications must be submitted to Genworth prior to May 1st, 2014. If the refinance application is submitted on or after May 1st, 2014, the new premium rates will apply.Genworth Financial Mortgage Insurance Company Canada
7. How will the new premiums apply to an existing Genworth insured loan if the mortgage is ported to a new property?
For applications submitted on or after May 1st 2014, the new premium rates plus any applicable surcharges will apply when there is a port and increase to the current mortgage amount.
Changes On Or After May 1st, 2014
8. If I submit an application for mortgage insurance to Genworth prior to May 1st, 2014, and the application then gets resubmitted with changes or updates on or after May 1st, 2014, will the application continue to be eligible for the current premiums.
As long as the original application was submitted to Genworth prior to May 1st 2014, and there are no changes to the property, then the current premiums will still apply.
9. If a lender has cancelled (in error / technology issues/ making changes) a file that Genworth received prior to May 1st, 2014 and then needs to re-open or resubmit the application on or after the May 1st, 2014, can they resubmit and still be charged the current premium rates?
Where the submitting lender does not change, and there are no changes to the property, the mortgage insurance application will still be eligible for the current premium rates.
10. What would happen if there was a previous approval with Lender A under the current premium rates and the same application is then submitted by Lender B on or after May 1st, 2014?
New premium rates would apply to Lender Bs application as it was submitted to Genworth after the May 1st, 2014 deadline.
Almost no annual growth for national HPI
The national HPI has grown at a below-inflation rate of 0.5% over the last 12 months, the smallest gain since November 2009. Moreover, the fact that monthly gains are reported for May and June does not mean that the market recently turned the corner. These two months typically register the strongest growth rates in a year. Indeed, the two latest rises were among the weakest in history for months of May and June. If seasonally adjusted, the national HPI would been down in both months this year. However, the weakness is not regionally broad-based. The national HPI was dragged down by 12-month home price declines in Western Canada metropolitan areas (Vancouver, Calgary, Edmonton and Winnipeg) and a tiny increase in Victoria. In Central Canada and in the East, home price growth ranges from decent to strong (left chart). This is consistent with the state of home resale markets. For example, the Vancouver market turned favorable to buyers at the end of last year, while the Toronto market remained balanced and Montreal’s market has never been this tight since 2005. That being said, a rebound in home sales recently occurred in Canada which was also felt in the largest Western metropolitan areas. This should help limit home-price deflation in these areas.
The Teranet–National Bank Composite National House Price Index increased 0.8% in June, a second gain in a row after an eight-month string without a rise.
On a monthly basis, the index rose in 8 of the 11 markets covered: Winnipeg (0.1%), Quebec City (0.3%), Montreal (0.8%), Toronto (1.3%), Halifax (1.5%), Hamilton (+1.6%), Victoria (+2.1%) and Ottawa-Gatineau (+2.2%). The index was down in Calgary (-0.1%) and Vancouver (-0.3%), and flat in Edmonton.
From June 2018 to June 2019, the Composite index rose 0.5%, the smallest 12-month gain in ten years. The HPI declined in Vancouver (-4.9%), Calgary (-3.8%), Edmonton (-2.6%) and Winnipeg (-0.4%). It was up in Victoria (0.3%), Quebec City (1.5%), Halifax (2.7%), Toronto (2.8%), Hamilton (4.8%), Montreal (5.4%) and Ottawa-Gatineau (6.3%).
Source: National Bank Financial Markets; Marc Pinsonneault
NORTHERN STAR (FOR NOW...)
In contrast to the US, Canadian growth is accelerating sharply going into the second quarter, following a solid gain in domestic demand to start the year.
Fast, and accelerating, population growth, and remarkably strong employment growth are providing a solid underpinning to consumer spending and the housing market.
Positive export data suggest that the ongoing strength in domestic demand will be buttressed by net exports in the second quarter, and possibly beyond.
Canadian inflation is at the Bank of Canadas target, in sharp contrast to the US, where it has moved away from the Feds objective. This gives the BoC room to keep rates on hold if inflation remains on target.
Downside risks remain important and are all linked to US-centric developments, with worries about US trade policy ongoing despite the pause with China.
Recent Canadian developments stand in sharp contrast to events in much of the rest of the world. Whereas US growth is clearly decelerating, Canadian growth is on an upswing, with recent indicators pointing to a very sharp rebound from a somewhat sluggish start to the year. Canadians appear to be, for the time being, largely insulated from the broader malaise facing the global economy as consumer and business confidence has improved sharply in recent quarters, owing to strong sales and job creation. While there are a number of factors suggesting that the growth rebound observed will persist through 2020, there is a risk that a divergence between Canadian and US outcomes may not last.
Source: Scotiabank Economics