Living In Brampton

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[✅Why is CMHC tightening qualifications? ]

👉They also have emphasized the 15% of existing mortgages that are now in deferral and believe there is a risk that 20% of all mortgages could be in arrears when deferrals end. Their stated justification for tightening qualification requirements is "to protect future home buyers and reduce risk."

[✅What are these changes in Underwriting Policies? ]

👉Effective July 1, the following changes will apply for new applications for homeowner transactional and portfolio mortgage insurance:

1. The maximum gross debt service (GDS) ratio drops from 39 to 35
2. The maximum total debt service (TDS) ratio drops from 44 to 42
3. The minimum credit score rises from 600 to 680 for at least one borrower
4. Non-traditional sources of down payment that increase indebtedness will no longer be treated as equity for insurance purposes

CMHC goes on to say that "To further manage the risk to our insurance business, and ultimately taxpayers, during this uncertain time, we have also suspended refinancing for multi-unit mortgage insurance except when the funds are used for repairs or reinvestment in housing. Consultations have begun on the repositioning of our multi-unit mortgage insurance products."

[✅What does this mean for new borrowers?]

👉Let’s look at what you can get today if you make $100,000, you buy a condo, with $2000/year taxes and $350 maintenance fees. Hypothetical but it’ll give you a good enough idea of these changes.

As of today, that borrower can take on debt at the 39/44 ratios limit.
This means 39% of this borrower's income goes towards servicing the mortgage and other related household debt such as property/maintenance/condo fees.

What does this translate to in numbers? A borrower with an income of $100,000 today can borrow approximately $494,000 (inclusive of CMHC insurance premium)

However, with the new changes at 35%, a borrower can borrow approximately $436,000 (inclusive of CMHC insurance premium)

This is approximately a drop of 12% of what a potential buyer can borrow July 1st onwards.

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Peel Market Weekly Update

We see an increase in price by +2.5% over the period, and increase in DOM by 2 days. However an increase in the number of sold listing by +28.8%, subsequently the number of new listings has been increased by +20.9%. This will give us an decrease of weeks of inventories from 1.9 weeks to 1.8 weeks respectively from 1st week of May. to 2nd week of May. 2020.