Ottawa: Canada Mortgage and Housing Corporation (CMHC) is increasing its mortgage loan insurance premium rates for multi-unit properties.
Effective June 19, 2023, premium rates will increase by 1.55% for MLI Select properties and either .85% or .75% for standard rental housing, retirement and supportive housing, and student housing/single room occupancy (SRO) properties.
The increase reflects the adoption by CMHC of new accounting standards through the International Financial Reporting Standards 17 (IFRS 17) and related changes that came into effect January 1, 2023. Approximately 30% of Canadians rely on rental housing to meet housing needs.
CMHC offers both funding opportunities and mortgage loan insurance products to support the construction, purchase and refinancing of rental properties.
“We are implementing a new restriction on use of funds as a condition of insurance for market refinance loans. The restriction ensures investments focus on the supply and preservation of multi-unit residential housing in the immediate term,” CMHC said.
Effective immediately, refinance proceeds must be used for a permitted purpose in relation to residential housing.
This could include one or more of the following:
• purchase,
• construction,
• capital repairs/improvements (including for increased energy efficiency and accessibility), or
• securing permanent financing (take-out financing to pay off a short-term construction loan).
Certain other uses may be permitted on a case-by-case basis; however equity take-out or distributions to equity holders will not be permitted.