On a mortgage of $100,000, this represents a reduction of $500 based on a five per cent down payment.

The premium for mortgage loan insurance is based on the amount of the loan in relation to the value of the home. The premium may be paid in cash or added to the mortgage.

The following are the new premiums:

For more on how mortgage insurance works for you, read PJ's column "Canadians: Five Percent Will Buy You a Home!"

"CMHC leads the market in using technology to improve client service and the efficiencies of its operations. In 1996, CMHC introduced emili, an automated insurance risking system that makes the application process for mortgage loan insurance faster and the risk assessment of the application more precise. Through innovations such as emili, and the experience we have gained through its use, we are now in a position to pass on the benefits to Canadians through reduced homeowner mortgage insurance premiums," said Karen Kinsley, President of CMHC. "In addition to making home ownership more affordable, CMHC offers a wide range of new and innovative mortgage insurance products and services that meet the changing needs and lifestyles of Canadians."

"Canadian home buyers will benefit because the VRMBS will provide the mortgage market with an additional competitive source of funds which will help lower mortgage financing costs," added Ms. Kinsley.

The introduction of VRMBS will allow Canadian financial institutions to pool variable rate mortgages into Mortgage-Backed Securities for the first time. This will facilitate the funding of variable rate mortgages which represent a large proportion of the Canadian mortgage market. Once pooled into VRMBS, they may be sold to the Canada Housing Trust for purposes of issuing Canada Mortgage Bonds.

For more on how Mortgage-back Securities may work for you, read PJ's column "Canadian Mortgage Market to Top C$500 Billion, Favoring Mortgage-backed Securities".