Ottawa Tightens CMHC-Insured Mortgage Rules

In a bid to save Canadians from themselves, Ottawa has tightened some lending rules for CMHC-insured mortgages.


Finance Minister Jim Flaherty has been expressing concern about Canadians' record household debt levels for about a year, especially in light of a persistent housing boom in most large cities.


One thing hasn't changed: it's still possible to buy a home with a small downpayment. If you have 5 to 20 per cent to put down, you need to qualify for mortgage insurance to get a prime mortgage, and that generally means CMHC (Canada Mortgage and Housing Corporation).


As of July 9, the following changes will affect you, but only if you need a CMHC-insured mortgage. They don't apply to conventional mortgages.

  • The maximum amortization period is 25 years, down from 30 years. (Note that current pre-approved mortgages with 30-year amortization are not grandfathered. Unless a purchase is made before July 9, the amortization on the pre-approved, CMHC-insured mortgage will be reduced to 25 years.)
  • Homes over $1 million are no longer eligible for CMHC-insured mortgages.
  • The maximum amount you can borrow to refinance your mortgage is 80 per cent of the value of your home, down from 85 per cent.
  • You can only qualify for CMHC insurance if your maximum gross debt service (GDS) is 39 per cent and your maximum total debt service (TDS) is 44 per cent (down from 45 per cent). These numbers refer to the percentage of your income needed for all housing costs (GDS) and the percentage required for GDS plus other debts (TDS). Some lenders may have lower guidelines.

The Finance Minister says these measures are aimed at slowing down a housing market that looks overexcited, and preventing Canadians from stretching themselves too far to buy a home in a hot market. "What we anticipate is less than five per cent of new home purchasers will be affected by these measures.... Some people will buy less into the market.... I consider that desirable."


Check with your Realtor or mortgage broker for more information. Meanwhile, here is an FAQ on the changes.

At the same time, new regulations aimed at conventional mortgages came down from OSFI, the federal organization that oversees the finance industry. These should have little effect on CMHC-backed mortgages. Mostly they direct financial institutions to check and verify borrowers' identity and ability to pay -- things we hope the lenders are already doing.


The biggest change affecting consumers is in home equity lines of credit (HELOCs). The maximum loan-to-value ratio for these will now be 65 per cent, down from 80 per cent.


This change addresses widespread concern that Canadians are borrowing too much against the equity in their homes. The government wants home ownership to be a vehicle for saving, not spending.




How much is your home worth?


The only real value is what a buyer and a seller shake hands on. But if you're selling or buying a home -- or paying taxes on one -- you need a realistic dollar figure to work from.


And that is going to depend on whom you ask. Your home has different value to different people and institutions, and many percentage points can separate the assessed value from the price your home actually fetches on the market. (Isn't that why you immediately suspect something's very wrong with a house that's being offered at below assessed value?)


Here's a top-to-bottom look at who determines house prices and what they're thinking.


Realtor: A Realtor's job is to get top dollar for a home, so you're likely to hear the highest valuation from this real estate professional. Realtors have access to MLS® statistics that aren't available to the public: they know how long homes are taking to sell in your neighbourhood and how sold prices compare to asking prices. They're also out there all the time, looking at properties, meeting the people at open houses and talking to other Realtors. With all that information, they'll arrive at the highest price they think they'll be able to get, considering comparable properties in your area and current market conditions.


You: You love this place. You've got it fixed up the way you like it, and every inch of it has a memory attached. You've been doing your homework, reading Real Estate Weekly and checking out the listings on and you have a price in mind that reflects not only what you think you can get, but also what you want to get in order to move to your next home.


The Bank: Lenders do not want an exaggerated value attached to a home because they might end up wearing it. They want a conservative valuation so if the people who buy your home fail to pay their mortgage, the lenders will be able to get their money back. When an offer is accepted, in most cases the lenders send out an appraiser to look at the home and determine if it's worth what the buyer and seller have agreed on. If the appraiser thinks it's worth considerably less, the buyer has to look for other supporting financing, or the financing can fall through altogether. It can be hugely inconvenient if you're the seller, and devastating if you're the buyer.


BC Assessment: Here's the starting point. The most conservative valuation of your home comes from this self-supporting Crown Corporation. BC Assessment is in charge of attaching a dollar value to all of the 2 million properties in private hands throughout BC. It does this so that each municipality and taxing authority can collect property taxes based on a provincewide assessment standard.

This doesn't mean that someone from BC Assessment will visit your home every year. While it has appraisers, it doesn't have nearly enough for that. BC Assessment has a vast data bank which includes information from municipalities, the provincial government, the real estate boards and others.

Your property assessment is set on July 1 of the previous year and based on dozens of factors including:

  • finished area
  • age
  • lot size
  • number of bedrooms and bathrooms
  • condition and quality
  • layout
  • sundecks and patios
  • outbuildings like sheds and garages
  • views
  • traffic and noise
  • schools
  • neighbourhood amenities

BC Assessment analyzes home sales in bulk to establish market value for properties with similar attributes in similar neighbourhoods. Basically, it looks at the same things you do when you're house hunting: "Well this one's nice inside but it's too close to all that traffic on Main Boulevard. The other one's a bit smaller, but it's on a quieter street and it's got a finished basement."


Most assessments go up because of changes in the overall real estate market. If your neighbourhood suddenly became hot last year and homes were selling for far more than they did the year before, you'll see it in your assessment this year.


When there are extreme market changes, the government has even stepped in to cap the assessment. It did so in 2009 when prices in some places fell by over $100,000 from 2008 highs.


Your assessment could also go up because of something you did, e.g., took out a building permit for an addition or substantial updating. By changing the size or the effective age of your house, you've made it more valuable.

So What Is My Home Worth?

You can see how your assessment compares to that of other similar homes using BC Assessment's e-valueBC tool. Keep in mind, though that the values shown are for July of last year.


You can talk to a Realtor, or several. They know the local market inside out. Realtors often have their own methods for determining the market value of a home, and you could get several answers, all within the same ballpark. What the home actually lists for could be different again, depending on the Realtor's selling strategy. For instance, in a seller's market the list price could be lower than those of comparable homes, in hopes of inciting a bidding war.


If you want a detailed, current valuation, you can access the same data that lenders and real estate professionals use. Landcor Data Corporation's Property Valuator report costs $29.95, and along with a current market value, you get a history of the property, assessment data, neighbourhood market trends and much more. Landcor uses the BC Assessment database and other sources and analyzes the mountain of data using its own proprietary methods. 


Ask your neighbours, friends and relatives. What the heck? This is the Lower Mainland real estate market. Apart from the weather, house prices are practically all we talk about, right? Can't hurt to see which way the wind is blowing.





The Best Thing You Can Do To Sell Your Home

The simple act of cleaning and decluttering before putting your home on the market can add thousands to your selling price, according to the HomeGain 2012 National Home Improvement Survey. Besides showing your home as a more spacious, blank canvas for the next homeowners, a big purge means that when it's time to move, it'll be easier and cost you less.


When faced with rooms full of amassed bric-a-brac and basements and storage lockers bulging at the seams, it's easy to feel overwhelmed. Where do you start? And how will you get rid of it all? We turned to two local professional organizers for advice.


Start the decluttering process at least a month in advance — longer if you have a large home or have been living there for a long time, recommends professional organizer and image consultant Rowena List, owner of Getting It Together. "Give yourself enough time. Most people underestimate how long it will take to declutter a home."


Limor Friedman, professional organizer and owner of Vancouver In The Box, advises spending at least a couple of hours per day in the month leading up to the open house sorting and getting rid of stuff — starting with the easiest jobs first.


"Before digging into the crawl space where you store old memories and photos, start with the present — with the stuff that you see every day and are less attached to," says Friedman, pointing to items like chipped dish sets, old clothing, and children's  toys. "After the first 'sort and purge,' you will feel so much better. Then you will be ready to tackle the past — the old items you have left in the basement or the attic."


Once you've decided where you'll start, it's time to get ruthless. List suggests that you arm yourself with plenty of heavy-duty black garbage bags, then designate sorting areas: donate, sell or consignment, and toss.

Things like broken and rusty appliances or torn or stained clothing headed for the trash pile are the easiest to determine. Deciding what to keep versus what to donate, sell, or even recycle can be tougher.  

Evaluate each item and ask yourself what purpose it serves. Is it irreplaceable? When was the last time you used it?


"What are the chances that your next new printer will come without a cable?" says Friedman. "Recycle the old cables you held on to for years."


Remember the end goal.


"Only keep what you need, use, and love," says List, noting that people tend to use only 20% of their things 80% of the time. "Most people live in fear of 'what if I need it?'" I support my clients in living with a faith-based mentality: believing that what they have is what they need... once we do the sorting."

Once you’ve determined what to lose, start offloading your cast-offs before you lose momentum. Here are some resources to help you along your clutter-busting journey:

Toss/Recycle/Donate It

Things like expired medication, batteries, antifreeze, or broken appliances have to be disposed at the appropriate depots. Find out what goes where here:


Metro Vancouver Recycles: Select a material type and enter your postal code for a list of depots, charitable locations, and consignment stores near you. Or download their free mobile app.


GVRD’s “101 Things to Do With All Your Old Stuff” : Read this PDF for tips on selling, recycling, and donating. Join people around the world getting rid of stuff on this grassroots community page.


There's no shortage of charities to which you can donate clothing, household goods, and small appliances. Some of them, such as Big Brothers and the Canadian Diabetes Association offer free home pickup. 


Here are some local links too:


Fraser Valley



North Shore




Sell or Swap It

It doesn’t cost anything to create listings on classified sites like Craigslist and Kijiji. And as long as you take a good photo and price your item in line with similar items, you can offload large pieces of furniture in less than a week. Free items can go really fast. Bonus: you won't have to haul it away. Also check out:  


Secondhand Savvy: Search freelance writer and mindful-consumption advocate Jo-Anne Lauzer's blog for local rummage/thrift sales, auctions, flea markets and antique shows.

Outsource It

Fed up with pre-sale decluttering and junk removal? Enlist the help of a pro here:

Resist the temptation to do your sorting and purging on the other end. “Do it all before you move,” says List. “You will feel less stress and have more energy, time, and money.”



National residential property prices in the United States increased slightly in the three months to the end of April but analysts expect them to increase further by 1.2% over the rest of 2012.

The latest figures from Clear Capital shows that all regions except the Midwest saw mild quarterly price gains. The West, South and Northeast saw both quarterly and yearly price gains and the only area with price declines was the Midwest, but that area's declines were less severe when compared to April's report.


‘Markets have continued to show signs of bottoming out. The projections we made at the beginning of the year are playing out and we expect to see the nation gain just over 1% through the year's end,’ said Alex Villacorta, director of research and analytics at Clear Capital.


‘Home prices continue to show relative strength in April with virtually no change over the short term and tapering losses over the longer term. There has been quite a bit of buzz in the housing industry surrounding turning REOs into rentals. Our data suggests early activity from these programmes could be starting to take effect, with national REO only home price gains on a price per square foot basis vastly outpacing fair market prices on a national level,’ he explained.


‘Should investor interest continue to drive the expansion of REO to rental programmes over the next several months, there could be a significant impact on the market overall in terms of providing a rising floor to home values,’ he added.


Quarter on quarter results were notable only in how little change was seen this month, with numbers very similar with the price changes reported last month.


The nation lost a little ground with quarterly losses of 0.2%, showing continuing price stability over previous months' reports.


For the past five months, price movement at the regional level has settled in under 1% on a quarterly basis except in the Midwest, which the firm said is a level of stability not seen for a decade.


As the West, Northeast, and South are all in positive territory, significant losses in the Midwest are pulling down national numbers. The Midwest lost 2.7% of its value over the quarter, which is the fifth month of declines for this beleaguered region. Despite mild winter weather and an early spring, it wasn’t enough to kick off a home buying season in this region.


Looking at yearly results, prices are down 1% compared to last year, which is an improvement over the -1.4% loss posted in April’s Market Report.



The Northeast, a market that has held up well throughout the housing crisis, posted a light 0.7% increase in prices year on year, while the rest of the regions are still trying to climb back into positive territory.


The West and South, while still negative for the year, also saw improvements over last month’s report, shrinking their annual losses by 1.4% and 0.3% respectively.


Midwest year on year performance paints a very different picture, a loss of 4%, which is deeper than last month’s yearly loss of 3.8%.


The Phoenix market, hard hit in the housing meltdown, is starting to sizzle with quarterly values increasing 3.8% more than the next highest MSA. Phoenix also tops the Highest Performing 15 list for the second month and has been either leading or in second spot on this list since February. However, with peak to current values at -58.2%, there is still a long way to go for Phoenix to see the values it once had.


The Milwaukee MSA is the hardest hit market in April with a dramatic quarterly loss of 12.5%. This loss is 5% more than the second hardest hit MSA, Columbus, Ohio, which posted a loss of 7.5%.



The number of properties listed for sale continued to increase in the Greater Vancouver housing market in May. The number of sales decreased year over year, but remained relatively constant compared to recent months.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,853 on the Multiple Listing Service® (MLS®) in May 2012. This represents a 15.5 per cent decline compared to the 3,377 sales recorded in May 2011.

May sales were the lowest total for the month in the region since 2001 and 21.1 per cent below the 10-year May sales average of 3,617. However, sales have been constant throughout the spring months, with 2,874 sales in March and 2,799 sales in April.

“Home sellers have outpaced buyers in recent months, however, there continues to be an overall balance between supply and demand in our marketplace,” Eugen Klein, REBGV president said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 6,927 in May 2012. This represents a 16.8 per cent increase compared to May 2011 when 5,931 homes were listed for sale and a 14.4 per cent increase compared to April 2012 when 6,056 homes were listed for sale on the region’s MLS®.

Last month’s new listing total was 15.3 per cent above the 10-year average for listings in Greater Vancouver for May.

At 17,835, the total number of homes listed for sale on the region’s MLS® increased 7.9 per cent in May compared to last month and increased 21 per cent from this time last year.

“Our sales-to-active-listing ratio sits at 16 per cent, which is indicative of balanced market conditions,” Klein said. “As a result of this stability, home prices at the regional level have seen little fluctuation over the last six month.”

The MLS® HPI benchmark price* for all residential properties in Greater Vancouver currently sits at $625,100, up 3.3 per cent compared to May 2011 and up 2.4 per cent over the last three months. The benchmark price for all residential properties in the Lower Mainland** is $558,300, which is a 3 per cent increase compared to May 2011 and a 2.3 per cent increase compared to three months ago. 

Sales of detached properties on the MLS® in May 2012 reached 1,180, a decline of 24.8 per cent from the 1,570 detached sales recorded in May 2011, and a 6.1 per cent decrease from the 1,256 units sold in May 2010. The benchmark price for detached properties increased 5.1 per cent from May 2011 to $967,500.

Sales of apartment properties reached 1,156 in May 2012, a decline of 5.9 per cent compared to the 1,228 sales in May 2011, and a decrease of 14.6 per cent compared to the 1,354 sales in May 2010.The benchmark price of an apartment property increased 1.7 per cent from May 2011 to $379,700.

Townhome property sales in May 2012 totalled 517, a decline of 10.7 per cent compared to the 579 sales in May 2011, and a 5.3 per cent decrease from the 546 townhome properties sold in May 2010. The benchmark price of a townhome unit increased 0.9 per cent between May 2011 and 2012 to $470,000.

*Editor’s Note: Benchmark prices underwent a re-calculation this month in order to more accurately reflect trends measured by the MLS® Home Price Index. There were no changes to the calculation of index values.

This re-calculation involved aggregating benchmark prices using the sales weighted approach for the reference period (i.e. January 2005) and thereafter linking movements in aggregate benchmark prices to their corresponding MLS® HPI.
The methodology, available at, will be updated later this week.

**Lower Mainland: Includes areas covered by the Real Estate Board of Greater Vancouver and the Fraser Valley Real Estate Board.

Spotlight on Greater Vancouver home prices:



Home price measure
May 2012
1 month change %
6 month change %
1 year change %
MLS® HPI benchmark price
Average price
Median price


Home price measure
May 2012
1 month change %
6 month change %
1 year change %
MLS® HPI benchmark price
Average price
Median price


Home price measure
May 2012
1 month change %
6 month change %
1 year change %
MLS® HPI benchmark price
Average price
Median price


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Reciprocity Logo The data relating to real estate on this website comes in part from the MLS® Reciprocity program of either the Greater Vancouver REALTORS® (GVR), the Fraser Valley Real Estate Board (FVREB) or the Chilliwack and District Real Estate Board (CADREB). Real estate listings held by participating real estate firms are marked with the MLS® logo and detailed information about the listing includes the name of the listing agent. This representation is based in whole or part on data generated by either the GVR, the FVREB or the CADREB which assumes no responsibility for its accuracy. The materials contained on this page may not be reproduced without the express written consent of either the GVR, the FVREB or the CADREB.