The CMHC wants the Canadian Revenue Agency to provide more robust verification of incomes stated on mortgage applications.

The call comes following an investigation by the CMHC into the correlation between incomes stated on mortgage applications and those reported to the CRA.

It now wants the tax agency to take a “more direct and formal role” in verifying incomes according to documents obtained by Reuters.

Some other countries including the US and UK have systems where the tax agency does provide lenders with verification of mortgage applicants’ incomes and the CMHC believes this would cut potential incidents of mortgage fraud, which can have a serious impact on the economy, especially if there is another financial crisis.

The CRA told Reuters that it is looking into ways that it can respond to CMHC’s concerns and provide lenders with income verification.

While the majority of Canadians are honest on their applications, a recent study by Equifax found that 13% think it’s ok to lie on a mortgage application and 16% believe mortgage fraud to be a “victimless crime”.

The study of mortgages originated between 2013 and 2016 found a 52% spike in suspicious mortgages, mostly in the highest priced housing markets.

Buyers looking for detached homes in Metro Vancouver have more choice as sales weakened again in June.

Detached home sales fell 42% to 766 and the Real Estate Board of Greater Vancouver says that the sector is leading the move towards a buyers’ market.

“Buyers are less active today. This is allowing the supply of homes for sale to accumulate to levels we haven’t seen in the last few years,” Phil Moore, REBGV president said. “Rising interest rates, high prices and more restrictive mortgage requirements are among the factors dampening home buyer activity today.”

Although new listings were down 7.7% across all residential property types year-over-year and down 17.2% from May 2018, total active inventory was 8,515, 40.3% higher than a year earlier.

While detached sales recorded the largest decline year-over-year, apartment sales were also down sharply (by 34.9% to 1,240) along with attached homes (down 37.3% to 419).

Price growth is slowing
The increased supply and weakened demand means that, although prices continue to rise, the acceleration of prices is slowing.

The benchmark price for a detached home is $1,598,200, up 0.7% from a year earlier but down 0.6% compared to May 2018.

For apartments the benchmark is $704,200, up 17.2% y-o-y and up 0.4% m-o-m; for attached homes the benchmark price of $859,800 is up 15.3% y-o-y but virtually unchanged month-over-month.

“With reduced demand, detached homes are entering a buyers’ market and price growth in our townhome and apartment markets is showing signs of decelerating,” noted Moore.