Canadian mortgage holders have told the Canadian Association of Accredited Mortgage Professionals (CAAMP) in its fall 2013 survey that they are comfortable with their mortgage debt levels and consider mortgages to be a form of “good debt.” The Annual State of the Residential Mortgage Market in Canada report, released today, was authored by CAAMP Chief Economist Will Dunning.
This level of comfort may be due to the fact that Canadians believe they are in control of their mortgages: taking aggressive actions to pay them down, leveraging their equity to consolidate debt or make new investments, taking advantage of low interest rates and increasingly turning to mortgage brokers rather than major banks for their mortgage needs.
Highlights from the CAAMP Mortgage Report
For homes purchased in 2013, 82 per cent had fixed rate mortgages. Overall, 66 per cent of homeowners have fixed rate mortgages, 26 per cent variable rate mortgages and 8 per cent combination mortgages.
For homes purchased in 2013, 84 per cent have amortizations of 25 years or less. Overall 81 per cent have amortizations of 25 years or less.
40 per cent of all new mortgages in 2013 were obtained through a mortgage broker, while 42 per cent were obtained from a bank. Overall mortgage broker share has increased from 25 per cent to 28 per cent since last year.
For mortgages that have been paid off in the last two decades, repayment periods have been 30 per cent shorter than the original contracted period.
During 2013, the average discount on a five-year fixed rate mortgage was 2.13 points – the average mortgage is 3.06 per cent, compared to the average posted rate of 5.21 per cent.
For borrowers renewing their mortgage in the next six months, 96 per cent will see a lower rate. For borrowers who renewed their mortgage in 2013, 64 per cent saw a lower rate.
On average, home equity in Canada is 66 per cent of the value of a home, compared to less than 50 per cent in the US, and 83 per cent of Canadian homeowners have at least 25 per cent equity in their home.
Mortgage credit has slowed from an average of 8.6 per cent in the last decade to 4.5 per cent for 2013 and is projected to be even lower at 3.25 per cent in 2014.
Among those who purchased homes in 2013, 57 per cent were first time buyers.
During 2013, 38 per cent of borrowers took steps to accelerate their repayment period, including increasing their payment amount, making a lump sum payment or increasing their payment frequency.
Overall, 80 per cent of those surveyed say mortgage credit is good debt, 84 per cent say that real estate is a good investment and 80 per cent expressed positive feelings of confidence and security toward their mortgages and home ownership in general.
The full report can be downloaded here – [PDF Link]