Nanaimo, BC (PRWEB) May 05, 2014
In order to protect Canada’s housing market The Canada Mortgage and Housing Corporation is making mortgage rules stricter once again. On Friday April 25th, Tara Perkins from the Globe and Mail reported that The CMHC said that it will no longer insure mortgages on second homes effective as soon as May 30th 2014.
Marion Patrick, long time Canadian real estate pundit and agent with Remax of Nanaimo said in an interview today “CMHC says owner occupied second homes only account for 3% of the overall Canadian market which may be higher in larger cities. They say this change won’t affect Canada’s housing market in a significant way, but there are specific groups that will be affected. Parents who already have insured mortgages will no longer be able to co-borrow for their children on an insured mortgage, and adding restrictions to self-employed Canadians to have 3rd party income validation may prevent those buyers to buy a home."
“The main import of this announcement is that it tells us there are more changes ahead. Buyers may want to consider buying now as it will be harder when more restrictions are in place,” Patrick said.
The CMHC has two direct competitors in the private sector, Genworth MI Canada and Canada Guaranty. They both have generally less strict rules for those that are self-employed. At this point it isn’t clear if these two companies will adopt the new changes set out by the CMHC.
CHMC was founded in 1946 and in order to help returning Second World War veterans purchase homes. It has since grown into one of Canada’s largest financial institutions. When Canadian home buyers apply for a mortgage through a bank, it is mandatory that they get mortgage insurance when they have less than 20 percent as a down payment. In 2012, Ottawa told CMHC that it needed to work towards stabilizing Canada’s financial system. The new change is aimed at limiting the amount that Canadians can borrow in order to lower their exposure to risk.
Marion Patrick began her real estate career in Vancouver, BC during the early 90s and now works with Remax of Nanaimo. She provides services throughout the entire Oceanside region including, Nanaimo, Parksville, Qualicum Beach, and Nanoose Bay through her website http://www.vancouverislandoceanside.com.