CMHC made a huge announcement last week and they didn’t do a great job explaining what impacts this would have on home buyers. Instead of putting the change in practical terms, they updated the public with ratios, which makes the impact on our industry very difficult to understand. My colleague, Jim Steffler (of TLC Mortgage Group, Dominion Lending Centres), made it much easier to understand…While CMHC isn’t the only Canadian mortgage insurer, historically the other insurers follow suit with policy, so this will likely have an impact this summer. If the other insurers don’t change, affordability should remain as is. Here’s the news if you missed it: https://www.bnnbloomberg.ca/housing-agency-tightens-canadian-mortgage-rules-amid-downturn-1.1445837 What’s changing on an insured mortgage with CMHC as of July 1st?• Minimum 680 credit score for at least one applicant.• No more borrowed down payment.• Ratio’s drop to 35/42% (this is significant!)Here’s what that drop in ratios does:• Cuts buying power approximately 10%.• Currently a purchaser earning $100,000 with 5% down can afford a $480,000 home. This will drop to $430,000 as of July 1st. That’s a $50,000 swing!Other things you should know:• Change takes place to applications submitted as of July 1st. Closing date is irrelevant.• As of now, the other 2 insurers (Genworth and Canada Guaranty) have not announced an underwriting policy change. Historically they do follow CMHC’s lead.• Don’t be surprised if we see in time 20% down deals and refinances also use these ratios at some point…• I would expect a red hot entry level market this next month.CMHC has been overly pessimistic about housing (they seem to want their 9 to 18% price drop to come true), and unfortunately this announcement is going to make it tougher for first time buyers to enter the market.Now is the time to buy if you have a minimal down payment and are looking for a first home! If you have any questions please reach out to me and I will be happy to discuss your options further.