The Canadian Mortgage Housing Corporation has announced it will be tightening mortgage qualifying rules on insured mortgages effective July 1st, 2020. At least one of the borrowers will have to have a minimum credit score of 680, up from the previous score of 600. CMHC has also reduced the ratios from 39/44 to 35/42. Also, in order to buck the practice of borrowing money for down payments, CMHC has said unsecured personal loans and unsecured lines of credit will no longer be treated as equity for insurance purposes.
While the news isn’t catastrophic, buyers who use CMHC to insure their mortgages will see their purchasing power go down at a time when inventory is scarce, and demand is high. The new rules follow a pessimistic outlook from CMHC, which predicts pricing in the housing market to decline 12-19%, and 20% of mortgages to fall into arrears.
We also checked in with Laurie Furness at The Mortgage Center to see where rates are going. According to Laurie, “Mortgage rates are staying low, and Banks are quite aggressive given the lower mortgage volume.”
The pandemic has profoundly impacted the Canadian economy. However, the Ontario real estate market has remained resilient and still offers excellent opportunities for buyers and sellers looking to invest in the market.
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