01/17/2017 10:10 EST | Updated 01/17/2017 10:11 EST

Mortgage Insurance To Get Costlier As CMHC Hikes Rates

OTTAWA — Canada Mortgage and Housing Corp. is raising the cost of mortgage loan insurance effective March 17.

The Crown corporation estimates the increases will add about $5 to a monthly mortgage payment for its average homebuyer.

CMHC says the changes reflect new regulatory requirements that came into effect on Jan. 1 that require mortgage insurers to hold additional capital.

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The CMHC logo is seen on a Quebec City office, September 15, 2010. (Photo: Canadian Press Images/Francis Vachon)

The premiums are calculated based on the loan-to-value ratio of the mortgage being insured.

The size of the increase in rates depends on that ratio.

Lenders typically require mortgage loan insurance when a homebuyer makes a down payment of less than 20 per cent.

The cost can be paid in a single lump sum, but CMHC says the amount is often added to the mortgage principal and repaid over the life of the loan.

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