The tougher qualifying rules that came into force July 1 are making it harder for some Canadians to buy homes, however, there’s no need to panic.

As we communicated to you in last month’s newsletter, the Canadian Mortgage and Housing Corporation (CMHC) announced plans in early June to reduce borrowing limits, demand higher credit scores, and restrict down payments for anyone who needs default insurance from the agency. That kind of insurance is mandatory for “high-ratio” buyers putting less than 20% down on a home.

While the change is putting many buyers off taking out a mortgage, buyers still have ways to shape up in the eyes of the CMHC — or choose an alternative agency altogether.

Why did this happen?

The changes are meant to steady the economy by controlling debt and protecting lenders from people who pose a high risk of defaulting.

While the rules will sting for some people trying to crack their way into the real estate market, they could be a blessing for others. By reducing the number of buyers, CMHC hopes to curb demand and balance out home prices.

What should homebuyers do?

It’s important to recognize that, if you have more than 20% down payment to purchase a new home, these changes may not affect you at all. If you do have less than 20% down, we still have access to two alternate insurers outside of CMHC who have announced that they have not implemented these tighter qualification restrictions just yet.  This policy can be changed at anytime without notice, which is why it is important to secure a pre-approval if you are planning to purchase anytime soon.

Is anyone else affected?

According to a recent report by CMHC, today’s record-low rates are predicted to last for at least 12 to 18 months, until the economy starts to stabilize. That means there’s no better time to see how much you can save on interest and your monthly mortgage payments by exploring some refinancing or restructuring of your existing mortgage.

Whether you’re buying or refinancing, we will do our best to help save you money on your mortgage.  Remember, we can compare rates from more than 40 lending partners — including many that don’t need to use the CMHC.