Historically low interest rates are helping boost the residential real estate market in Calgary and across the country, with the trend expected to continue throughout 2021.

Canada Mortgage and Housing Corporation (CMHC) is changing its underwriting policies for insured mortgages.

Starting July 1, new applicants for CMHC's mortgage default insurance will have to meet the following criteria:

The Bank of Canada announced on April 15 that it would keep its overnight rate target at 0.25 per cent and that no additional rate cuts should be expected.

This decision to hold rates steady came on the heels of three rate cuts in over a month, as the COVID-19 pandemic and plummeting oil prices exact a heavy toll on the Canadian economy.

Everyone's heard the term "house poor," referring to anyone who spends a large portion of their income on homeownership, leaving little money left for other expenses or small luxuries. It's a classic case of one's eyes being bigger than their stomach.

That's why getting a mortgage pre-approval can be a double-edged sword – it's nice to know what you can afford, but it's awful tempting to go ahead and spend to the maximum you're approved for. However, this decision can leave buyers vulnerable to fluctuations in the housing market or the overall economy.

Debt might be a fact of life this time of year, but experts warn of long-term impacts

With the holiday shopping season shifting into high gear, many Calgarians will be reaching for their credit cards.

But those decisions about taking on debt to put smiles on faces can be the unwelcome gift that keeps on giving, putting the squeeze on your ability to qualify for your first — or next — mortgage, say experts.

"Where people sometimes make a big mistake is they don't realize how much of an impact their debt has," said mortgage broker Joe Jacobs, president of Mortgage Connection Inc. in Calgary.

CMHC survey paints picture of Canadians' financial health

The financial health of Canadians has received widespread attention in the media with the debt-to-income ratio reaching record levels in recent years. Despite rising indebtedness, low interest rates in recent years have kept the cost of servicing debt manageable.

To help get a handle on where Canadians debt lies, CREB®Now digs into CMHC's debt survey.

$1.9 trillion
Over the past decade, Canadian households have become increasingly indebted, with total household credit edging higher again in the third quarter of 2015 to $1.9 trillion. Mortgage credit, at over 70 per cent of total debt, was the principal driver of this increase. Between 2001 and 2011, average inflation-adjusted MLS® residential housing prices appreciated by 72 per cent.

Local housing industry experts say a change that governs the amount buyers are required to put down when purchasing a home will significantly impact Calgary's already sluggish market.

Effective Feb. 15, 2016, the change announced by the federal government in early December will raise the minimum down payment for new insured mortgages from five to 10 per cent on the portion of the house price above $500,000.

"The intent of [the change] is to pull back demand, and they're slowing demand in a market where we're already seeing demand slow," said CREB® chief economist Ann-Marie Lurie, noting resale residential sales in Calgary have already dropped nearly 20 per cent from the 10-year average.

Tips on how to get back in the black

According to Statistics Canada, household debt levels in the country have  risen to a record high of 163 per cent of Canadians' disposable income.

Yet that doesn't mean debt has to be a burden. In fact, it is far easier to get out of debt than most people think. You just need the right strategy.

While there are many ways to get out of debt, there is one that seems to work more
effectively than the rest: the modified snowball technique.