The Canadian Association of Accredited Mortgage Professionals (CAAMP) have just released their annual Mortgage Insights – an excellent publication resulting from their October 2014 survey of 2,000 Canadians on the economy, the housing market, and choosing a mortgage.
Very comfortable with their own financial positions
The Canadian housing market has remained a focus of intense speculation, with many economists and journalists estimating varying degrees of housing overvaluation. Despite this often negative economic narrative, our study continues to find strong, but cautious optimism among the majority of Canadians.Although some uncertainty exists in the short-term economic outlook, and there are sparse but vocal predictions of a grim near-term economic future, the majority of Canadians remain cautiously optimistic in our economy, very comfortable with their own financial positions, and continue to feel that Canadian real estate is a good long-term investment.
My home is a place to live
We asked respondents to allocate 100 points to reflect their opinions that their home is a place to live versus an investment, and the average homeowner allocated 70% of their points to my home is a place to live. So, while homeowners undoubtedly view their homes as an investment that they would like to appreciate over time, what really makes it a great purchase is the fact that it becomes home.
Canadian homeowners are well positioned to weather an economic storm
Three-quarters of Canadians (76%) say they would be well-positioned to weather a potential economic storm, while a similar proportion (73%) say they do not regret taking on the size of their mortgage.
The average down payment is a surprising 20%
If trends continue, gifts from parents may overtake RRSPs as the second leading source of down payments; however, no evidence suggests that down payments are or will be propped up in any significant way by non-savings sources any time in the near future.
The increasing importance of mortgage brokers
The mortgage broker channel has had much success in Canada, and has become well-established as a key player in the mortgage industry. In fact, in 2014 the share of outstanding mortgages that were placed through the broker channel reached its highest point since we began measuring: 30% of outstanding mortgages were obtained through a broker, up from 23% in 2009. This significant growth is a result of share taken from both the bank channel and others such as credit unions.
Top reasons to consult a mortgage broker
Broker customers continue to cite a wide variety of non-rate reasons for dealing with mortgage brokers, including “to get multiple quotes, so I didn’t have to do the research myself, to help me understand my options and the process, and to help me with the paperwork.”
|To get the best rate||67%|
|To get multiple quotes||40%|
|To avoid doing the research myself||37%|
|To help me understand my options and the process||33%|
|To help me with the paperwork||31%|
[notice]Just one-in-ten broker customers choose ONLY rate as the reason for choosing brokers, showing that most customers are looking for brokers to provide a variety of benefits over the direct-to-bank channel.[/notice]
Ross Taylor on mortgage brokers
The CAAMP survey stated most buyers consult two, sometimes three different mortgage professionals before making a final decision. While it’s true some of buyers will have “no-brainer” mortgages, there is a growing percentage who are finding the qualification process very challenging. Top of this list would be buyers with bruised credit, unverifiable income, or those who are buying investment properties.