The Canadian mortgage market continues to grow, helped by low mortgage rates that make home ownership possible, even as housing prices rise, according to a report released today by the Canadian Association of Accredited Mortgage Professionals (CAAMP).
The report, authored by CAAMP’s chief economist Will Dunning, was based on information gathered by Maritz Research in a phone survey in February. The report indicates that even if interest rates increased by as much as one-half point, 80% of Canadians could tolerate the increase to their mortgage payments.
“Canada is economically strong and Canadians are financially fit and the mortgage market reflects this,” said Jim Murphy, President and CEO of CAAMP, in a news release. “Our recent survey shows that mortgage holders continue to be satisfied with their current rates and could absorb a further 0.5% increase, without it having a “significant impact” on their standard of living.”
At a time when the U.S. mortgage market has been shaken by defaults in the sub prime sector, CAAMP asked Canadians how aware they were of alternative products such as interest-only mortgages, longer amortization periods and no down payment mortgages. About half of consumers, 51%, said they were aware. Thirty-six per centresponded positively to the alternatives, 27% were negative and 31% expressed a neutral view. Younger Canadians who did not own homes were most interested in these alternatives. On the whole, the CAAMP survey shows a strong and growing Canadian mortgage market, and unlike the Americans, Canadians remain confident and optimistic about the future of this market.
“Overall, this survey confirms that most Canadian home owners are very risk averse when it comes to their mortgage,” said Paul Grewal, AMP, Chairman of CAAMP. “Mortgage rates continue to hold at historic low levels and an increasing number of consumers choose the conservative path of fixed rates.”
Seventy-three per cent opted for a fixed term compared to 67% a year ago. Variable rate mortgages account for 21% of the total mortgage market and combination mortgages for only 6% (down from 11% a year ago).
Responding to recent increases in mortgage rates, only 16% of Canadians noted a positive impact, whereas 26% noted a negative impact on their overall standard of living.
With regards to mortgage renewal activity in Canada, almost one quarter of respondents (23%) have yet to decide on the type of mortgage renewal, although 44% of surveyed mortgage holders who expect to renew their mortgages in the coming half of 2007 will choose a five-year term. And further indication of the health of the Canadian economy is supported by the fact that of the 4.9 million home owners in this country, almost 300,000 will not renew their mortgages (mortgages will have been paid off).
For a full copy of the survey, please visit: www.caamp.org.
Majority of Canadian mortgage holders could handle small rate increase thanks to healthy economy
- By: IE Staff
- April 16, 2007 October 31, 2019
- 14:15