Global News: Mortgage market check-in – July 9, 2020

Global News Morning: Mortgage market check-in

Alyse checks in with Clinton Wilkins Mortgage Team for a mortgage market check-in and to see what the summer has in store for consumers looking to buy a home.

Don’t feel like watching the video? Check out the local housing market transcript below. Global News Morning: Mortgage Market Check-In.

Transcript:

Mortgage market check-in

Alyse: [00:00:00] Well, we all know by now that the pandemic has impacted the economy locally and across Canada, and one might assume the housing market would also take a big hit. And in some cases it has. But according to our next guest, the mortgage market in Halifax and in many parts of the Maritimes is as hot as ever. And with more on why that is. And to tell us about changes that just went into effect for homebuyers, I’m joined by senior mortgage adviser with Centum Home Lenders Ltd. Clinton Wilkins is with us once again this morning, joins us from his home in Halifax via Zoom, hey Clinton!

Clinton: [00:00:36] Thanks for having me, I hope you’re staying safe.

Alyse: [00:00:40] I am. And I know that’s why we aren’t having you in the studio right now, otherwise, you would be here with us. So this is the route we’re going with for now. But glad you could take some time for us. Let’s talk about the housing market. I know you just released an update to your clients saying that the housing market is as hot as ever in this part of the world, in Halifax and in parts of Atlantic Canada. Why is that?

The market is hot in Halifax

Clinton: [00:01:02] Well, I think part of it is the limited inventory that we’re having here in Halifax. You know, the sales are certainly there, but there’s a limited amount of inventory on the market. I can tell you ourselves, we have hundreds of people that are pre-approved and they’re looking for homes every day. But there’s only so much inventory for people to purchase. And consumers are asking me with COVID, do you think that you know, the prices are going to go down or do you think there’s going to be more homes for sale? You know, people lose their jobs or their businesses or, you know, matrimonial breakdown. And I think the issue in Halifax is we’re having a big population growth and there’s only so much inventory on the market.

Some of the stats around even rentals, we’re down to one percent vacancy. So, you know, if you’re looking to buy a home, I think we’re in a situation, at least for first-time homebuyers, we could be in buy now or buy never situation. Now, July 1st, CMHC released some updates that it could be more challenging for some consumers to buy up to buy a home. So I think it’s certainly all of these factors together have impacted the market here in Halifax and the rest of Atlantic Canada.

CMHC announces changes that could impact borrowers

Alyse: [00:02:12] Yeah, let’s dive into that a little bit, Clinton. This is interesting that we talked about this when we spoke with you virtually about a month ago. Canada Mortgage and Housing Corporation, known as CMHC, of course, announced last month they were making some changes for those who are looking to buy a home, of course. So who specifically is going to be affected by these changes and what are these changes that just went into effect on July 1st?

Clinton: [00:02:41] I think it’s a scary time for people, no matter what everything that is going on with COVID. Obviously, lots of people are impacted either financially or otherwise, but CMHC announced some changes that were effective July 1st, that they want to see a higher credit score. So their minimum credit score in terms of their beacon requirement is now 680. They also want to have tighter debt servicing ratios. So basically you have to have a little bit more affordability. And they removed the option for them to insure borrowed down payment so that was known as flex down.

Changes to the mortgage insurance requirements

So if you are borrowing the down payment from a cashback mortgage, from a line of credit, or credit card or a loan that is no longer available with CMHC. The good news for consumers is there’s two other insurers in the Canadian marketplace. There’s Genworth and Canada Guaranty. And they’ve both come out and said that they are not going to follow CMHC changes. So that’s good news for consumers. The challenge is that CMHC is the biggest insurer in Canada, it’s a Crown Corporation, and the Canadian Mortgage and Housing Corporation was known to insure the majority of buyers that were buying in more rural areas.

So when you’re buying a home outside of Halifax, chances are if you’re putting down less than 20 percent and you need an insured mortgage, you are getting an insured mortgage from the Canadian Mortgage and Housing Corporation. Now, is it absolutely not possible to buy a home if you have less than a 680 credit score? No. Every single consumer can get approved for a mortgage. We’re lending to everyone. The challenge is you may need more than that minimum down payment of 5-percent. Maybe if we go with one of the other insurers, they’ll require a down payment of 10-percent. Or maybe you’re not even able to get an insured mortgage.

Buying a home outside of Halifax

But there are certainly options out there for people. They may just need a little bit more skin in the game. So we’re seeing some consumers that are saying we’d rather put down 20 percent or able to get those funds together to avoid that requirement of having an insured mortgage. There are lots of changes.

Alyse: [00:04:43] I was going to say, the takeaway there, Clinton is to start saving. If you’re thinking about buying a home, especially outside of Halifax, now is the time to really be thinking about savings.

Clinton: [00:04:53] Well, you know, if you’re a prime customer if you have great credit and there’s lots of room in your debt servicing. Everyone’s going to approve you. It’s those more marginal approvals that we’re seeing, a little bit of a harder challenge. It’s even harder, I think, a little bit in Halifax. Even though the other two insurers are not following suit, I think they were a little bit more conservative anyway in terms of that credit matrix. So, you know, download Borrowell, download Credit Karma. These are free apps that are available on the exchange that you can monitor your credit with TransUnion and Equifax yourself. You know, I think it’s even more important to seek the advice of an unbiased mortgage professional now than it ever has been.

Mortgage brokers give you options

One of the big reasons and I mentioned this before, a lot of bank branches were either closed over COVID or had reduced hours. And, you know, we’ve really backfilled some of that capacity. And now with these changes of CMHC, there are some bank lenders that that’s their primary insurer. So even though that may be one lender can’t do the mortgage for you, there are lots of other options out there. In our marketplace, there are about 40 different lenders that are lending to consumers.

So one product might not be the same for everyone. And I think that’s why it’s really so important to seek the advice of an unbiased mortgage professional. Buying a home is the biggest purchase of your life and the mortgage is the biggest debt. So you really want to make sure you’re protected and you want to make sure that you’re really getting that expert advice.

Alyse: [00:06:18] Clinton, thank you so much. It’s always great to check in with you. And we will check in again. I’m sure we’ll have a whole new sense of how things are looking in the fall to we’ll be curious to see what happens here locally and beyond. Thanks again. That is a Clinton Wilkins senior mortgage adviser with Centum Home Lenders.

Looking for more information about the local housing market, questions from this mortgage market check-in or other mortgage application advice? Feel free to contact us!