Chad Moore Calgary Mortgage Broker

Canada Housing and Mortgage Corporation (CMHC) Announced Mortgage Rule Changes Taking Effect July 1st 2020. Here’s What’s Happening:

Guys, this is BIG NEWS!

I want to explain theses changes, how they effect home buyers, what might happen in the housing market and what opportunities are available. 

Mortgage Qualifying Changes:

CMHC is reducing home buyer qualifying ratios.  This means a buyers maximum affordability, with income and down payment remaining constant, is being reduced by about 10%. 

Minimum Credit Increases:

CMHC is also raising the minimum credit score from 600 up to 680.  It is even more important to be mindful of your credit.  While on the topic of credit – here is one very basic but helpful tip – please make sure you have active and ongoing credit.  Start with a credit card in your name :-).

Housing Market’s Reaction?

In terms of our housing market, these Mortgage rule changes restrict home buyer demand.  If we have reduced buyer demand, without an equal reduction of home supply, that alone puts downward pressure on home prices. 

We’ve seen other restrictive rule changes push buyer demand lower, resulting in a period of time where the market adjusts.

Where Is The Opportunity?

So where is the opportunity in all of this?  I think home buyers, that are purchasing within their affordability and have maintained a good credit profile, will have even more negotiating leverage.  

I think this will continued to pressure home prices above the $500,000 price point and increase demand for entry level homes priced under $500,000.

The opportunity for home sellers is working with a full time and trusted Realtor or Realtor team who will clearly educate them on the current market and how to anticipate future Real Estate markets.  

Summary:

To sum everything up for you, CMHC is tightening Mortgage qualifying criteria and increasing the minimum credit score required for home buyers with LESS THAN 20% down payment, starting July 1st. 

All else being equal, this is reducing the maximum affordability home buyers can purchase.  One big opportunity for buyers is understanding their purchasing power before-and-after the rule change, and adjusting their plans accordingly. 

I hope this has been helpful information.  If you would like an expert opinion on your Mortgage affordability, home purchase plan and MUCH MORE, please connect with me today!

Thank you,

Chad Moore