OTTAWA — The Canada Mortgage and Housing Corporation is tightening its lending standards, making it tougher for Canadians to borrow money to purchase a home.
The country’s national housing agency says it’s changing the credit score needed to get mortgage insurance to 680 from 600 and limiting the gross and total debt servicing ratios to 35 and 42 respectively.
CMHC says the changes will be effective on July 1 and are accompanied by the suspension of most refinancing for multi-unit mortgage insurance.
The moves come just over two weeks after CMHC chief Evan Siddall appeared before the finance committee in Ottawa, forecasting a decline of between nine per cent and 18 per cent in average house prices in the next year.
He warned a growing debt deferral cliff could be headed Canada’s way in the fall, when some unemployed Canadians will need to start paying their mortgages again, and said as much as one-fifth of all mortgages could be in arrears if the economy has not recovered sufficiently.