Allen Chow - Mortgage Agent

Attention: Effective July 1st!

Canadians looking to borrow money for a home purchase will experience some extra challenges after the Canada Mortgage and Housing Corporation announced changes to its lending standards on Thursday. The country's national housing agency is increasing the qualifying credit score for mortgage insurance to 680 from 600 and limiting gross and total debt servicing ratios to their standards of 35 per cent and 42 per cent, respectively. "COVID-19 has exposed long-standing vulnerabilities in our financial markets, and we must act now to protect the economic futures of Canadians," CMHC head Evan Siddall said in a statement. "These actions will protect homebuyers, reduce government and taxpayer risk and support the stability of housing markets while curtailing excessive demand and unsustainable house price growth." Under the changes effective July 1, CMHC will also no longer treat non-traditional sources of down payment funding, such as a personal unsecured line of credit, as equity for insurance purposes. It will also suspend refinancing for most multi-unit mortgage insurance. The move comes just weeks after Siddall appeared before the Standing Committee on Finance in Ottawa to warn of trouble ahead for the housing market. "Our support for home ownership cannot be unlimited," he said. "Home ownership is like blood pressure: you can have too much of it. Housing demand is far easier to stimulate than supply and the result, as we’ve seen, is Economics 101: ever-increasing prices."
The majority of mortgages insured by the CMHC will not be affected by the more stringent qualifications.

Overall criteria:
-Maximum Total Debt Service (TDS) Ratio from 44 to 42
-Gross Debt Service (GDS) Ratio from 39 to 35
-Credit score MINIMUM 680

We’ve been hearing this for years. Curious to see what will actually happen. The best time to buy (I feel) is always NOW.

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Decisions, decisions! Fixed rate or variable? This article may help (potential) borrowers decide what’s best for them.

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