When it comes to mortgage management, Canadians are a remarkably responsible bunch according to the latest consumer survey released recently by the Canadian Association of Accredited Mortgage Professionals (CAAMP).
The survey found that Canadians continue to aggressively pay down their mortgages, despite the fact that when they renew, most will be doing so at the same or a lower rate than they currently have. This is just one of the facts found in CAAMP’s report, Annual State of the Residential Mortgage Market in Canada, which explores Canadians’ mortgage management habits.
When it comes to first-time homebuyers, looks like Mom ‘n’ Pop are pitching in more than previously, in response to already high and ever-increasing prices of real estate across the country. While first-timers are typically putting down 21 per cent on their home purchase, 17 per cent of that down payment comes from family in the form of gifts or loans.
As for those who don’t own real estate at all, the majority of respondents age 18 to 34 said they were waiting for prices to fall and savings to increase, while two-thirds of those over the age of 55 said they didn’t own property because renting was a better option for them.
“Overall, the CAAMP fall report paints a picture of homeowners, whether just starting out on their ownership journey or long-time mortgage holders, as remarkably confident,” says Jim Murphy, accredited mortgage professional, and president and CEO of CAAMP. “They wait until they are financially stable before buying, and they take advantage of low interest rates to aggressively reduce their mortgage debt. Home ownership continues to be an important anchor for the Canadian economy.”
Mortgage management & money matters
- About 425,000 live in homes purchased during 2014. The average price was just over $400,000, for a total value of $173 billion.
- About 125,000 Canadian homeowners fully repaid their mortgages during 2014. A further 50,000 to 75,000 expect to fully repay their mortgage before the end of 2014. In combination, about 190,000 mortgages will have been fully repaid during the year.
- About 900,000 current mortgage holders made lump-sum payments in the past year, totaling $16 billion.
- Among the 190,000 to 200,000 Canadians who have repaid (or are expected to repay) their mortgages during 2014, lump-sum payments total about $5 billion.
- About 900,000 mortgage holders voluntarily increased their regular payments during the past year, by amounts that equate to more than $3 billion per year.
- The average mortgage interest rate is 3.24 per cent, down from the average 3.5 per cent from a year ago.
- On average, Canadian home equity amounts to 74 per cent of the value of their homes; more than 85 per cent have 25 per cent or higher.
- About 11 per cent of homeowners used their home equity for debt consolidation and repayment, renovations, investments, purchases, including education, and “other.”