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[LENDER UPDATE] Manitoba to Eliminate 7% Retail Sales Tax (RST) on Mortgage Default Insurance Premiums (Effective July 1, 2020)

Manitoba to Eliminate 7% Retail Sales Tax (RST) on Mortgage Default Insurance Premiums | Effective July 1, 2020
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In April, the Manitoba government announced changes to the provincial Retail Sales Tax (RST). Effective July 1, 2020, Manitoba will eliminate its 7% RST on certain residential and commercial property insurance contracts. This new RST exemption will apply to mortgage default insurance premiums on new or renewed insurance contracts that come into effect after June 30, 2020.

In response to this change, Canada Guaranty is pleased to advise that our adjudication system has been updated to reflect the following:

• Applications with closing dates prior to July 1, 2020 will be subject to the existing 7% RST.

• Applications submitted to Canada Guaranty with closing dates on or after July 1, 2020 are exempt and will no longer be subject to the 7% RST.

Please Note: Applications approved prior to May 21, 2020, with closing dates on or after July 1, 2020, must be resubmitted to Canada Guaranty in order for the sales tax to be removed.

Please do not hesitate to contact a member of our National Accounts team with any questions.

Thank you,

Mary Putnam
Vice President, Sales and Marketing
Canada Guaranty Mortgage Insurance Company

Telephone: 416.640.8936
Toll Free: 866.414.9109 ext. 8936

announced a new benchmark rate that will apply to all insured mortgages effective April 6, 2020.



§  The weekly median 5-year fixed insured mortgage rate will be calculated by the Bank of Canada (“BOC”) from federally-backed mortgage insurance applications adjudicated by mortgage insurers; plus a buffer of 200 basis points, to be set by the Minister of Finance.


§  The weekly BOC benchmark rate will be published on a Wednesday ( and will come into effect at 12:01 a.m. the following Monday.


For mortgage insurance qualification purposes, all insured homebuyers must qualify for mortgage financing using an interest rate that is the greater of the contract mortgage rate or the Bank of Canada benchmark rate (i.e., the Bank of Canada’s median 5-year fixed insured mortgage rate plus 2% buffer). Below, please find additional clarity regarding the application of the benchmark rate:


§  All new mortgage applications submitted for insurance are subject to the qualifying interest rate in effect as of the date of submission.


§  Applications for mortgage insurance approved prior to the rate increase are still valid and do not require resubmission to reflect the rate change.


§  If the mortgage insurance application is received after the effective date of the new benchmark rate, the previous lower benchmark rate can be used, provided the lender made a legally binding commitment to make the loan to the borrower prior to the effective date of the benchmark rate change.


As a reminder, Canada Guaranty’s Vantage underwriting system will be updated to reflect the new BOC benchmark rate for qualification purposes. As a result, Lenders must continue to submit the contract rate for the loan upon submission of the mortgage insurance application.

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