It seems like there have been continuous changes, or talk of changes when it comes to financing and mortgage options so we asked our Mortgage Specialist Rylan Hahn for an update and as always, it is easy to read and very informative!
The name of the game for July is CMHC underwriting changes, low rates, and renewed optimism in the
housing market. We are going to focus below on the most impactful news of the month which is the
recent CMHC underwriting changes.
CMHS underwriting changes (why it means something and nothing at the same time)
On July 1 CMHC (who is one of the three government backed insurers who has to approve
purchases in Canada when buyers have less than 20% down payment) increased the credit
score requirement, remove borrowed down payment options and lower the debt ratio
threshold for clients.
These policy changes have been roundly viewed as extremely negative for Canadians and by and
large not necessary based upon the Bank of Canada's most recent assessment of the
Aside from the credit requirement excluding many credit worthy clients, the debt ratio decrease
is very damaging as it lowers the qualifying range for a client earning $80 000 from a purchase
price of $400 000 to $350 000.
Thankfully, there are two other mortgage insurers in Canada who have not changed their
requirements so on the surface it is business as usual, but is it?
Unfortunately, the answer is “No” currently it is not business as usual. Although the other two
insurers have made no official guidelines changes, we have noticed a distinct change in their
underwriting and approval standards for clients who might have average to good credit or
tighter debt ratios.
In our experience, this approach has resulted in some very subjective approvals or declines and
has created a bit of uncertainty in the lending markets.
My personal thought is the other two insurers have very strong management teams and
excellent leadership and as a result, they will work through this current uncertainty and we
should see renewed consistency fairly soon.
What does this mean for you?
Overall the outlook is very positive: rates are in the high 1% to low 2% range - which is outstanding,
house prices are generally affordable and there are great homes available, and what could have been a
dramatically market jarring decision by CMHC has been averted by the other two insurers.
I would be happy to answer any questions that you have about your mortgage or being approved for a
mortgage for the purchase of a new home.
Rylan Hahn, Roost Mortgage