If you are planning, or thinking to buy your first property, this information might be very important for you.
The head of the Canada Mortgage and Housing Corporation delivered a particularly gloomy forecast at House of Commons Finance Committee on Tuesday, May 19, 2020. ✔️Home prices could fall from their peak by 9% to 18% over the next year ✔️Mortgage arrears could top 20% ✔️Mortgage deferrals could jump to 20% from 12% by September
And (THIS IS THE MOST IMPORTANT PIECE OF INFORMATION) he hinted at a policy change of raising the minimum down payment to 10% from 5%, saying it would offer “more of a cushion against possible losses”
He said that all of this could happen “if our economy has not recovered sufficiently”. So, on June 4th, The Canada Mortgage and Housing Corporation (CMHC), Canada’s national mortgage insurance provider, unveiled stricter underwriting policies o for insured mortgages.
Now, ATTENTION, guys and girls:
Obtaining insured mortgage for a home purchase is about to become more challenging on July 1, 2020, particularly for first-time buyers and if you are dreaming of your own place you better check if you can qualify after July 1st.
The new measures include: ✔️ Limiting Gross Debt Service (GDS) ratios to 35% (from 39%) and Total Debt Service (TDS) ratios to 42% (from 44%) ✔️Raising the minimum credit score to 680 (from 600) for at least one borrower ✔️Banning non-traditional sources of down payment that “increase indebtedness”
Again, in simple words, it will get harder to get your mortgage if your down payment is less than 20% and your mortgage purchasing power will decrease by about 12%. Follow this account or tag a friend who is thinking to buy this year, as I will explain each change in details in the following posts.
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