HOW TO AVOID THE NEW CMHC RULES | Use Genworth or Canada Guaranty скачать в хорошем качестве

HOW TO AVOID THE NEW CMHC RULES | Use Genworth or Canada Guaranty

After forecasting that average home prices in Canada would drop 9-18% a week ago CMHC is back with another Canadian real estate bombshell, changes to their lending practices. What does that mean for someone buying a home in Canada? If you are using CMHC for your mortgage default insurance it reduces your maximum purchase price by about 10%. But CMHC’s two competitors decided that they were not going to follow CMHC’s lead and have instead stuck with their existing requirements. If you are looking to buy a home in Canada right now it might make sense to go with Genworth or Canada Guarantee instead of CMHC. Even better if you are going to be buying a home is that once again interest rates dropped! Now below 2%! I have a trivia question for you and I want you to put your answers in the comments below. What percentage of all mortgages in Canada are high ratio, so that’s less than 20% down and in turn require a mortgage default insurance policy? If you want bonus credit what percentage of first-time buyer are high ratio borrowers? I will have the answer at the end of the video but honestly the answers surprised me. Besides what is going on with the Canadian real estate market right now, which if you are curious you can check out my most recent update right here, is what is mortgage default insurance? And why do I need it? I am going to do an entire video on this but here is the condensed version. In Canada if you are putting down less than 20% down as a down payment on a home you must have mortgage default insurance. Those borrowers are what is called high ratio. If you have more than 20% down that’s what’s called a conventional mortgage. So that if you are unable to keep up with your payments and the bank has to reposes your home your mortgage insurance policy is triggered. The bank will be paid out the insurance policy and they will foreclose on your home. So no this insurance policy doesn’t really protect you it protects the banks and you pay for it. In return buyers can buy a home with less than 20% down. There are three providers in Canada for this mortgage default insurance, CMHC which is government owned, Genworth and Canada Guarantee, both of which are privately owned. Prior to July 1st you need a minimum credit score of 600 in order to qualify for a CMHC insured mortgage, as of July 1st at least one borrower on the mortgage will need a score of 680! That is a big change. For context the average score in Canada is around 700. The second change is your debt service ratio. This has two parts, first is your GDS, or gross debt ratio. That is your mortgage payment with the stress test interest included, home insurance and taxes, sometimes you will hear people call this PIT, payment, interest and taxes. The second part is your TDS or total debt service ratio. That includes things like car payments, credit cards, lines of credit but also things like child or spousal support. Your GDS before July 1st must be below 39% of your income and your TDS below 44% of your income. After July 1st those numbers change to 35% for GDS and 42% for TDS. But only if you have a CMHC insured mortgage. That last big change revolves around your down payment. Prior to July 1st you can get exceptions made when applying for a mortgage if you are borrowing part or all of your down payment. Alot of people are worried that these new rules will create downward pressure on Canadian real estate prices. With Genworth and Canada Guaranty both deciding not to follow CMHC's lead that may be less of a worry now. But with all the uncertianity in the Canadian economy there is plenty of speculation that the Canadian real estate market is due for a crash. This move by CMHC has added even more fear in the public's eyes about Canadian real estate. For the first time I believe ever in Canadian real estate a fix year fixed rate mortgage is being offered below 2% in Canada. That was HSBC dropping to 1.99%. But looking around five year fixed rates right now the mono lenders are around 2.29% while the big banks are sitting around 2.49%. As for variable rates as low as 1.75% for the mono lenders and 2.20% for the big banks. My name is Matthew Pfeifer and I am a realtor in Regina Saskatchewan working for Royal LePage Regina Realty. In nearly 10 years working as a real estate agent I have seen both ups and downs in the market. But there is no real estate market that you cannot buy or sell a house in. Often the media tries to present a Canadian real estate market or they talk about the real estate market in Canada as if there is a national market. The real estate market in Canada is very regionalized. Being from Regina I focus on the Regina real estate market. #CMHC #Genworth #CanadianRealEstate Royal LePage Regina Realty