Tag Archives: caamp

May 2013 Changes in the Canadian Mortgage Market

May 27, 2013

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Last week, CAAMP released its spring consumer report, Change in the Canadian Mortgage Market. A copy of the full report is available to download here, but for those that don’t feel like reading that whole report, here are some of the significant stats from the report:

  • Overall housing starts are projected to decline from 205,000 in 2011 to 150,000 by 2014. In total, the housing starts downturn will reduce related employment by 80,000 jobs.
  • For mortgages repaid during the past two decades, actual repayment has been two-thirds of the contracted period.
  • 8% of home owners took out equity on their home last year. The average equity takeout was $48,000, with the primary purpose being for renovations/home repairs.
  • 83% of home owners in Canada have at least 25% equity in their home.
  • Overall, 69% of mortgage holders have fixed rate mortgages. For those taken out in the last 12 months, the figure rises to 85%.
  • The average mortgage rate is 3.52%. For those renewed in the past 12 months the average rate is 3.15%.
  • For the past 12 months the actual average rate for a 5-year fixed-rate mortgage has been 2.20% below the posted rate.
  • 60% of Canadians have two or more credit cards, including 30% who have three or more. The average outstanding balance is $3,500.
  • Mortgage credit growth is slowing dramatically. For 2014, it is forecasted to be 2.5% to 3%, or roughly half the current rate.
  • Mortgage brokers continue to account for 25% of all mortgages. For new mortgages in the last 12 months, that total rises to 31%.
  • 18% of mortgage holders, or about 1.1 million, voluntarily increased their mortgage payments, while a further 16%, or about 975,000, made a lump sum payment during the last year.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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The CAAMP 2012 Mortgage Forum

November 26, 2012

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Right now in Vancouver, BC, the annual CAAMP (Canadian Association of Accredited Mortgage Professionals) mortgage forum is taking place.  It’s the annual “big event” in the Canadian mortgage industry where mortgage brokers, lenders and everyone involved in the Canadian mortgage industry get together to connect with each other and “talk shop.”

If you’re so inclined, you can read more about the conference here: www.mortgageconference.ca.  In addition, parts of the conference are being streamed live for those of us unable to attend (any for anyone else interested in watching).  You can watch it online at www.caamp.tv.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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CAAMP Releases Annual Consumer Survey Report

November 19, 2012

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Today, CAAMP released its fall consumer report, Annual State of the Residential Mortgage Market in Canada.

The report indicates that the majority of Canadian homeowners are still comfortable with their mortgage debt levels; however, it also identifies weaknesses in the mortgage market that could affect Canada’s economic recovery.

Here are some of the significant/interesting stats from the report:

  • Among all mortgage holders, 65% have fixed rate mortgages, 28% have variable rate mortgages and 7% have a combination. For mortgages in 2012, there has been a significant shift to fixed rate mortgages – 79% are fixed, 10% are variable and 11% are a combination of both.
  • 68% of mortgages obtained during 2012 have amortization periods of 25 years or less.
  • 32% of mortgage holders are making significant efforts to accelerate repayments, including taking one or more of the following actions in the past year:
    • 16% have voluntarily increased their monthly payments.
    • 15% have made a lump sum contribution to their mortgage.
    • 6% have increased their payment frequency.
  • For mortgages that have been repaid since the 1990s, actual repayment periods have generally been only two-thirds of the contracted periods.
  • Among borrowers who took out a new mortgage in 2012, a record 47% obtained it from a mortgage broker (Woohoo!).
  • For all current mortgages, 58% were obtained from a bank and 25% from a mortgage broker.
  • The average mortgage interest rate is 3.55%, which is lower than last year’s average of 3.92%.
  • There has been a considerable amount of locking-in (converting from variable rate to fixed rate). Among the 3.85 million Canadian homeowners with fixed rate mortgages, 13% locked in during the past 12 months.
  • Among mortgage borrowers who have renewed a mortgage this year, 61% experienced a reduction in their interest rate.
  • The average actual rate for 5-year fixed rate mortgages is 1.85 percentage points lower than typical (posted) rates in 2012.
  • The volume of outstanding residential mortgage credit is growing at a slower rate than prior to the recession. The growth rate is forecast at 6.9% for 2012, followed by 5.5% in 2013 and 4% in 2014.
  • Of the 9.7 million homeowners in Canada, 5.95 million have mortgages and 3.75 million are mortgage-free.
  • The arrears rate has fallen for 19 consecutive months and is approaching a record low of 0.25%.
  • 87% of Canadian homeowners have 25% or more home equity.
  • According to simulations, 17% of high ratio mortgages funded in 2010 could not have been funded today, including 11% of prospective high ratio homebuyers who can’t qualify for a mortgage under the new 25 year amortization rule.
  • Since the most recent round of mortgage tightening came into effect there has been a drop in Canadian housing resale activity: between August and October, sales were 8% lower than in the year prior to the announcement.

If you’re so inclined, you can read the full report here.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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Retiring With Debt: The New Reality?

July 9, 2012

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Article courtesy of MCAP.

 

Summer holidays can be a reflective time – a time to look at the bigger picture and think about long term objectives and realities. We all work hard. We all deserve a comfortable and fulfilling retirement. More and more Canadians are coming to terms with the prospect of retiring with debt – despite the fact that almost all of us realize that this is not an ideal scenario. So, why are some of us resigned to the fact that we will still be carrying debt into our golden years?

Retiring with DebtRecent survey data compiled for the by Bank of Montreal shows that 90% of Canadians feel that being debt free at retirement is very important. This ranks second only to the desire to have good health at retirement which 94% of Canadians feel is important. Leaving aside the intriguing question of the 6% who did not rank good health as being important at retirement, the 10% who did not rank being debt free at retirement as being important can surely find other things to worry about if they still have a mortgage or other consumer debt in later years. The survey data also shows, however, that just over half of us feel that we will likely still have a mortgage at retirement. This leaves a large cohort who could be disappointed because they predict that they will have a mortgage at retirement even though they also feel that it is important not to have one at that time.

Conventional wisdom says that a retiree will need about 70% of their pre-retirement income to retire comfortably. This is based on certain life stage assumptions such as the fact that most consumers who reach retirement will usually have slowed their purchasing of durable consumer goods like home furnishings and that financial support for dependents like children would usually have ended by then. It also assumes that the mortgage has been paid. If a retiree has not paid their mortgage in full but has perhaps built a large investment portfolio which can provide a healthy retirement income level, that strategy could be a perfectly sound one.

Faced with challenging employment prospects and reduced housing affordability, especially incertain large urban markets in Canada, many consumers are waiting longer before entering the housing market. That means that many still have mortgage outstanding later in life. According to the BMO survey, 50% of Canadians between the ages of 50 and 59 still have mortgages, as do 25% of those between 60 and 69. A typical baby boomer who purchased a home at age 25 with a mortgage amortized over 25 years would have paid that mortgage in full by age 50 – at the same time as children would have moved out of their fully furnished home and become self-sufficient. Then, the last 15 years of their working lives would have added to their sense of financial security through strong earnings and rising home values. For the many boomers who
experienced this kind of scenario, the world unfolded in an orderly and comfortable way. They had every reason to believe that they would be better off than their parents were. Survey respondents who think that retiring with a mortgage is less than ideal but who foresee that scenario for themselves anyway, might be applying the values of previous generations to their own very different circumstances. There are also surely others who know that they have been living beyond their means by using cheap credit and that the bills will come due later in life.

Now, for the good news from the survey: the average time remaining on a mortgage in Canada is 15 years. Only 12% of survey respondents had more than 25 years remaining on their amortizations and, similar to data reported by CAAMP, many Canadians are clearly making serious efforts to pay down their mortgages faster than their regular payment schedules require. Mortgagors in British Columbia, due probably to the very high prices in the Vancouver market, have the longest average time remaining on their mortgages and those in Saskatchewan and Manitoba, where housing affordability is more favourable, have the shortest.

Retiring without Debt

The BMO survey found that about one in five Canadians make lump sum mortgage payments and that over 40% increase the amount of their regular payments to pay their mortgages faster. The data clearly shows that many Canadians are working toward being mortgage free and it also seems likely that changes to mortgage rules which take effect today (July 9th) will amplify this even more.

Despite the fact that Canadians are entering the housing market later in life than previous generations did, and despite the existence of tax deductible mortgage strategies (like the Smith Manoeuver) and the use of HELOCs to convert high interest debt to low interest debt, consumers know that a debt free retirement is desirable. They say so in surveys and then they demonstrate their willingness to pay their mortgages quickly. But if half still foresee that they will be retiring with a mortgage, this looks like it could be the new reality.

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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The CAAMP Spring 2012 Mortgage Report

June 4, 2012

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If you love stats, you’ll love CAAMP’s (Canadian Associates of Accredited Mortgage Professionals) semi-annual report on the Canadian mortgage market.  You can read the full report here (be warned, it’s 40 or so pages long), but here are some interesting stats that I’ve pulled from it.

  • CAAMP Spring 2012 Mortgage ReportThere is currently $994 billion in mortgages on primary residences and $161 billion in Home Equity Lines of Credit (HELOCs).
  • The total value of owner-occupied housing in Canada is $3.48 trillion. There are approximately 13.7+ million households in Canada – 9.85 million are homeowner households, while 4.1 million are renter households.
  • 83% of Canadians have at least 25% equity in their home. The average amount of equity is estimated at $214,000. The average mortgage principal outstanding is around $170,000.
  • Individuals with HELOCs have an average of 82% equity in their homes. Those with mortgages and HELOCs have an average of 41% equity in their homes. For those with just mortgages, equity is 49%.
  • The total amount of equity take out during the past year is $46 billion, with most funds used for renovations ($17.25 billion), followed by investments ($10 billion) and debt consolidation ($9.25 billion).
  • Among all mortgage holders, 65% have fixed rate mortgages, 29% have variable rate mortgages and 7% have a combination of both.
  • 75% of outstanding mortgages have amortization periods of 25 years or less.
  • 19% of mortgage holders have made at least one lump sum contribution to their mortgage in the past year.
  • For mortgages that have been repaid during the past two decades, actual repayment periods have generally been only two-thirds of the contracted periods.
  • 23% of mortgage holders have increased their monthly payments in the last year. 19% have made a lump sum contribution to their mortgage.
  • Among borrowers who took out a new mortgage during 2011, 31% obtained the mortgage from a mortgage broker (up 4% from last year – people are starting to figure it out – we can save you $$$)!  For current mortgages, regardless of when they were obtained, 26% were obtained from a mortgage broker.
  • Among mortgage holders who purchased their homes in the past 5 years, if it had been mandatory to put down 10% to secure a mortgage, 45% said they would have been unable to make the purchase.
  • The average 5-year fixed rate discount was 1.77% lower than posted rates (2011 to present).
  • The average mortgage rate in 2011 is 3.64%, down from 4.04% a year earlier. For mortgages on homes purchased recently, the average rate is 3.48%.
  • Of those who renewed their mortgages in the last twelve months, 74% are paying lower rates than previously.
  • Accumulating down payment remains a considerable challenge to potential home buyers in Canada. 52% of tenants point to lack of a down payment as a reason they rent rather than own.
  • If the minimum down payment in Canada was 10% instead of the current 5%, there would have been 100,000 fewer home purchases annually from 2007 to present day.
  • There has been a considerable amount of “locking in” (converting from variable rate to fixed rate mortgages). 14% of fixed rate mortgage holders (slightly over 500,000) have locked in during the past 12 months.
  • 2012 mortgage credit growth of 8.5% will be below the 10 year average of 9.1%.

So there you have it – more stats than you’d ever want to know about the Canadian mortgage industry.  Again, you can read the full report here.  Anything specific catch your eye?  Any stats surprise you?

Tim

Tim is a mortgage agent in Barrie who specializes in helping first-time home buyers. He works with a variety of lenders and can help customize a mortgage with the best rates & options that fit the needs of each customer.

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