CMHC Tightens Rules

Canada Mortgage and Housing Corp (CMHC) announced Thursday it would tighten rules regarding mortgage insurance starting July 1 2020.

Basic Rule Changes:

• Minimum credit score was 600, will be 680 moving forward.
• Total gross debt servicing ratios were 39%, will be 35% moving forward.
• Total debt servicing ratios was 44%, will be 42% moving forward.

Evan Siddall of CMHC has stated that these changes are designed to ensure borrows have a larger down payment / borrow less, and that these measures will curtail excessive demand and unsustainable house price growth.

Sounds like a big deal – but is it?

CMHC is a household name and currently the largest default insurer in Canada. However, they are not the only option. At this point, other insurers have stated that they are not planning on following suit. Unless this changes, CMHC is likely to insure a smaller percentage of Canadian Mortgages.

Even before these changes came into play, CMHC insured a small portion of our mortgages. This change will have little to no impact on True North Mortgage clients.