Big breaking news on the mortgage front.
CMHC has decided to toughen up on their high ratio rules. This will impact home buyers by decreasing purchasing power by up to 11% when they have less than 20% to put down. These new rules come into effect July 1st 2020, which is fast approaching. This is a huge change. So far the other insurers haven’t followed suit, although speaking with industry insiders, it sounds like it might not be off the table. This would be a really good time to speak with your bank or mortgage broker if you are planning to purchase a home in the next month and you have less than 20% down.
Some coles notes from ratespy:
- Maximum gross debt service (GDS) ratio drops from 39 to 35
- Maximum total debt service (TDS) ratio drops from 44 to 42
- Minimum credit score rises 680
- Borrowed down payments will be banned
These are some fairly big changes that come on the tail from the damning CMHC article released May 27th- CMHC Housing Market Outlook, which predicts a bearish 9-18% decrease in home prices across the country in the next 12 months. All in all, it’s going to be tough to say how these changes will impact our housing market.Vancouver seems to be fairly insulated and recovers faster than other markets across the country. However, as the news likes to remind us about 5o times a day…these are unprecedented times. Definitely a good time to be reaching out to chat with your realtor or mortgage broker to discuss these changes and how they might impact you. Of course, I am always available for chat over email or by phone 604-649-4144.