Happy June, yes, it is already June, crazy how time is going by so quickly these days. The last time we reached out, the province was still in lockdown due to COVID-19. It is truly amazing to see everyone come together to help flatten the curve, and now see things get back to “normal.”
As we all move on to Phase 3 of the restart plan, there have been many changes in the real estate market. In this month’s blog, we are going to take a closer look at the new mortgage insurance policies and what it means for Buyers, the new five year fixed mortgage rate and what the next 90 days in real estate look like.
C.M.H.C. CHANGES MORTGAGE INSURANCE POLICIES
Because of COVID-19 the Canadian Mortgage and Housing Corporation are tightening lending standards, which will ultimately affect first time and high-ratio Buyers that put less than twenty percent on a down payment. Effective as of July 1, there will be THREE major changes.
· Down payments are no longer allowed to be made with lender money or credit lines.
· To get mortgage insurance, you will need a credit score of 680. This is up eighty points from the previous minimum of 600.
· Gross Debt Servicing (GDS) and Total Debt Servicing (TDS) ratios are changing from thirty-nine and forty-four percent to thirty-five and forty-two percent.
What do these changes mean?
It ultimately means that if you are Buying a home, it has become a little bit tougher to borrow money. It also means you will qualify for roughly twelve percent less than what you would have originally been approved for.
So if you were approved for a 350-thousand dollar mortgage, that means you will now qualify for a 308-thousand dollar mortgage.
Understandably because of the pandemic, there is a temporary shortage of income for many, so the changes ensure fewer default payments in the coming months/years.
NEW FIVE-YEAR FIXED MORTGAGE RATE IN CANADA
For the first time EVER in Canada’s history, the five-year fixed mortgage rate fell below two percent. The new rate, 1.99%, is the lowest ever recorded and comes at the perfect time as the market in Metro Vancouver has started to pick up significantly. This change comes after the CMHC forecasted a nine to eighteen percent drop in home prices over the next twelve months. With this change, now is a great time to look at refinancing your current mortgage or apply for one.
REOPENING THE MARKET – THE POST COVID-19 OUTLOOK
Over the last little while, we have been getting many questions from Buyers and Sellers (understandably) about what the next ninety days will look like.
Questions we have gotten from Sellers.
Can I actually Sell my house right now? Is this a good time to put my house on the market? Are people even looking at homes? Are homes actually Selling? Is my home worth more or less right now? Are banks still lending money to buy a home?
Questions we have gotten from Buyers.
Is this a good time to Buy a house? Are home prices lower as a result of COVID? Can I get a mortgage pre-approval right now? Are moving companies even still working? If I Buy, can I get a home inspection?
You have questions, and we have the answers!
The rest of June, July and August are being forecasted to be the BEST time to Buy or Sell in over a decade.
The market is starting to open back up in a BIG way, so if you are thinking of Buying or Selling a home, let us know, and we would love to answer any questions that you may have.
From ours to yours, we hope you are staying safe and enjoying the beautiful weather outside.
Kim: (604) 720-3659 | Sean: (604) 880-9400 | WhittallRealEstate@gmail.com
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