New changes to mortgage applications,

CMHC announced today that on July 1st new polices will take place in order to facilitate new homeowner transactions and portfolio mortgage insurance. The following is being implemented

  • Limiting the Gross/Total Debt Servicing (GDS/TDS) ratios to our standard requirements of 35/42;
  • Establish minimum credit score of 680 for at least one borrower; and
  • Non-traditional sources of down payment that increase indebtedness will no longer be treated as equity for insurance purposes.

COVID - 19 has really made CMHC have a bearish outlook on the Canadian Real Estate market. With their current outlook of possibly seeing 9-18% price decrease, the crown corporation is trying to mitigate any future uncertainty in the mortgage market.

CMHC has also suspended all multi-unit refinancing except when the funds are used to repair the current unit or reinvest in housing. What is important to note, the decisions being made today is authorized by the National Housing Act, legislation passed in 1938 and was intended to promote the construction of new houses, the repair and modernization of existing houses, and the improvement of housing and living conditions.

This will impact first time home-buyers in a big way, its a matter of time of when we will start seeing the fruit of the pandemic, and both the monetary and fiscal policies that were put in place to cushion the economic blow.