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80% of Canadian mortgage holders could handle small mortgage rate increase thanks to healthy economy
Canadian Association of Accredited Mortgage Professionals releases
bi-annual report on mortgage choices and perceptions in a changing market
VANCOUVER, April 16 /- 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 per cent 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 the
Canadian Association of Accredited Mortgage Professionals. "Our recent survey
shows that mortgage holders continue to be satisfied with their current rates
and could absorb a further 0.5 per cent 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 per cent, said they were
aware. Thirty-six per cent responded positively to the alternatives, 27 per
cent were negative and 31 per cent 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 per cent a
year ago. Variable rate mortgages account for 21 per cent of the total
mortgage market and combination mortgages for only 6 per cent (down from 11
per cent a year ago).
Responding to recent increases in mortgage rates, only 16 per cent of
Canadians noted a positive impact, whereas 26 per cent noted a negative impact
on their overall standard of living. Yet, the average rating (10-point scale,
where "1" means very negative and "10" very positive) increased to 5.00 from
4.88 a year earlier.
With regards to mortgage renewal activity in Canada, almost one quarter
of respondents (23 per cent) have yet to decide on the type of mortgage
renewal, although 44 per cent 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).
Average house prices rose by about 10 per cent in both 2004 and 2005 and
a further 11 per cent in 2006. Canadians remain optimistic about housing
markets. For all of Canada, only 9 per cent of consumers surveyed expressed
negative opinions about the prospects for house prices in their community.
When asked "Is now a good time or a bad time to buy a new home in your
community?" the most positive responses were given in Atlantic Canada and
Ontario. The most significant jump in positive responses was seen in British
Columbia, where it moved from below national average in the fall 2005 to
almost in line with the average this fall. Alberta had the most negative
outlook, where many consumers considered their local housing markets
over-heated.
The survey, "Consumer Mortgage Choices in a Changing Market", contains a
wealth of additional industry data including consumer response to new mortgage
options, the age distribution of mortgage holders in Canada, popularity and
rates of different mortgage terms, and anticipated mortgage renewals. For a
full copy of the survey, please visit: www.caamp.org.
About CAAMP
Established in 1994, the Canadian Association of Accredited Mortgage
Professionals (CAAMP), formerly the Canadian Institute of Mortgage Brokers and
Lenders, is Canada's national mortgage industry association. CAAMP has assumed
a leadership role in the industry it serves and has set the standard for best
practices for Canada's mortgage practitioners. In 2004, CAAMP created the
Accredited Mortgage Professional (AMP) designation as part of an ongoing
commitment to increasing the level of professionalism in Canada's mortgage
industry.
As a membership-based organization, CAAMP strives to develop its network
of professionals and to represent the interests of these individuals to
government, media and consumers. CAAMP has attracted over 9,800 members and
1,000 companies from across Canada - representing over 90% of Canada's
mortgage activity. CAAMP members make up the largest and most respected
network of mortgage professionals in the country. CAAMP's membership base
consists of mortgage lenders, brokers, insurers and other industry
participants.
CAAMP's other primary role is that of consumer advocate. On an ongoing
basis CAAMP aims to educate and inform the public about the mortgage industry.
Through its extensive membership database, CAAMP provides consumers with
access to a cross-country network of the industry's most respected and ethical
professionals.
In February 2007, Maritz Research conducted a 21-question telephone
survey with 1,212 residential mortgage holders in Canada. A sample of 1,212
Canadians ensures an accuracy of + 2.8%, 19 times out of 20.
A copy of the survey is available at www.caamp.org
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