The Canada Mortgage Housing Corporation is hiking the cost of mortgage insurance for homebuyers March 17 just one more piece of regulatory requirements requiring homeowners to hold more capital to offset risks in the stubbornly hot real estate markets in pockets of the country.

The increases apply to those who require insurance when they don’t have a 20 per cent down payment. This alone isn’t expected to have an impact on the market but when coupled with other changes it could start to add up. In the past year, higher down payment requirements on a portion of a home worth over $500,000 to 10 per cent, and the decrease in amortization – and now an increase in the cost of mortgage insurance.

Put it all together and there will be some, especially first time homebuyers, having to sit on the sidelines a little longer.

The actual increase in insurance premiums isn’t all that much and is calculated on the loan-to-value of the mortgage being insured. At a minimum, the changes will add about $5.00 to a monthly mortgage of a CMHC insured loan of approximately $245,000.

With this rate increase coming the same week higher mortgage insurance premiums take effect for Canadian homebuyers, it will add to a prospective buyer’s total monthly carrying costs and making the mortgage amount a buyer can qualify for incrementally less.