First-time home buyer Neil Blainey recently took a virtual tour of a listing for a condo with his realtor, Tony Zarsadias, a new reality during the COVID-19 pandemic.
After searching for more than a year, there’s added pressure on Blainey to buy.
The Canada Mortgage and Housing Corporation (CMHC) is about to tighten its mortgage rules. The country’s national housing agency is increasing the qualifying credit score for mortgage insurance to 680 from 600 and limiting gross and total debt servicing ratios to their standards of 35 per cent and 42 per cent, respectively.
CMHC President and CEO, Evan Siddall said they’re already seeing a significant number of mortgages being deferred as some Canadians struggle to keep up with payments.
“Starting in July, you’ll need some better credit scores and you’ll need to carry less debt, in order for us to insure your mortgage. At CMHC, we’re focused on housing affordability. Through these measures we’re giving you more time to build up your savings or to rebuild your credit if you’ve had trouble,” Siddall said.
For Blainey, he’s looking at properties in the range of $440,000, down from $500,000.
“It’s going to be a case of having to go to battle a bit to find a property and get the best deal, which we are prepared to do. But it is a bit of a waiting game, and trying to find that right property and we’ll have to jump on it too,” Blainey said.
The move by CMHC makes it harder for first time buyers, according to Zarsadias.
“There was so much uncertainty, and we were encouraging our clients if you can defer it then defer your payment. Because we don’t know what’s going to happen. There is so much more certainty now,” he said.
In May, while prices dipped slightly for condos, single-family homes prices actually increased. Zarsadias says the market here doesn’t need the help from CMHC.
“I think there’s a bit of a rush for people to buy. And it’s hard to say what’s going to happen after that,” he said.
CMHC is predicting Canada’s housing market could see a nine to 18 per cent decrease in prices over the next year.
With files from The Canadian Press