The CMHC released their latest Housing and Marketing Information report on Mortgage Lending 2009.

It provides some great information on the volumes of mortgages issued by banks and other lenders as well as the market share for CMHC approved mortgages in 2009. Here are some of the stats:

NHA and Conventional Mortgage Loans Approved by Lending Institutions, by Type of Lender

Other includes: credit unions, caisses populaires, other smaller institutions and privately-insured loans in some areas.

From this data we can see that:

NHA and Conventional Mortgage Loans Approved by Lending Institutions, by Type of Lender (Dwelling Units)

Other includes: credit unions, caisses populaires, other smaller institutions and privately-insured loans in some areas.

From this data we can see that:

Average NHA and Conventional Mortgage Loans Approved by Lending Institutions, by Type of Lender

If we then take the loan values divided by the number of units we can look at the average loan values as follows.

Residential Mortgage Credit by Lending Institutions, 1984-2009

The report also included interesting data on the volumes of mortgages issued by the different lenders.

Residential Mortgage Credit by Lending Institutions, 1984-2009, Market share

We can also look at their market share over the years:

You can see that this table shows that the Chartered Bank’s market share dropped 6% year over year in 2009. Also the chart below shows the market in 1999

Versus the market in 2009, as the Chartered Bank’s market share dropped 10%

It’s been an intriguing time in the mortgage market over the past few months and it really all kicked off in December 2009 when Finance Minister Jim Flaherty announced the latest mortgage regulation changes. Since then we’ve had mortgage rates jumping all over the place as bond yields, which influence fixed mortgage rates, rose rapidly in March and have now dropped off again, and the upcoming HST intro on July 1. Interestingly, mortgage rates haven’t declined as rapidly as they rose, so I thought it was a good time to see how this compares against historic data.

A quick look at the historical 10 year weekly results for the Government of Canada 5 year bond yield against the posted 5 year fixed rates of the banks shows the following mortgage rate trends (you can visit here for a detailed explanation of how bond yields affect mortgage rates:

5 Year fixed mortgage rates trend

Posted 5 year fixed mortgage rates vs Government of Canada 5 year bond yields
Last 10 years

Source: Bank of Canada

The historical 10 year spread between these was 2.72%, while last week’s spread was 3.41%, which is 25% higher! You can see at the far right of the chart that the spread starts to increase, so isolating this over the last year we get the following:

Posted 5 year fixed mortgage rates vs Government of Canada 5 year bond yields
Last year

Source: Bank of Canada

Now the 1 year spread between these was 3.02%, resulting in last week’s only being a moderate 13% higher. Even with last week’s 0.11% drop in the 5 year fixed rates and today’s 5 year bond yield of 2.56% the spread is still relatively high.

Yields have dropped recently due to growing concern about the debt crisis in Greece spilling over and affecting North America along with decreased consumer confidence here at home. But hopefully we should expect fixed rates to come back down if yields stay where they are – especially if we compare today’s spread against the historic data.

The Canadian Mortgage Trends blog had an interesting post today about how some lenders are offering bonuses to sell mortgages at above-market rates. So as yields have come down rather than lowering their rates, some lenders are throwing out incentives to sell mortgage at higher rates. This is another great reason to make sure you compare mortgage rates before making any decisions.

It looks as though many lenders had expected fixed mortgage rates to continue rising or at least remain stable and have now been caught out by yields dropping. The big banks have recently said that they don’t like changing rates all the time as it throws off their sales staff and causes customer disruption. I think if it helped Canadian mortgage shoppers save money – we’d all be for a little disruption.

For further mortgage rates trends you can always refer to our Mortgage Rate Outlook Panel which includes top mortgage experts providing their short term outlook on the reasons why mortgage rates should go up, down or remain unchanged in the next 30 – 45 days. Our next release will be early June 2010.

Kelvin

CAAMP released their latest survey regarding the mortgage industry which resulted in the following key insights (Maritz survey for CAAMP):

House prices:

To what extent do you think housing prices in your community will go up or down in the next year?

Mortgage rates:

To What Extent Do You Think Mortgage Rates Will Change in the Next Year?

Average mortgage interest rate is 4.09%, down from 4.83% last year

Mortgage brokers versus banks

Among the mortgage shoppers who took out a mortgage in the past year, they used the following sources:

Mortgage holders:

Taking out a new mortgage on a home that was newly purchased or which previously did not have a mortgage (7%)

40% of borrowers, payments are at least
$100 per month more than required, which gives them flexibility to adjust payments
in the event of future challenges.

Mortgage types

For mortgages transacted during the past year, the rate types were:

These results are interesting as we typically find that for searches done on RateSupermarket.ca, fixed mortgage rates are typically 55-65%, with variables at around 25%-35% and the rest simply searching for the best rates regardless of type.

For mortgages transacted during the past year, the rate terms were:

For mortgages transacted during the past year, the amortization periods were:

Housing market forecasts:

Housing sector resale activity:

Volume of outstanding residential mortgage credit in Canada will exceed $1 trillion in mid-2010

The volume of mortgage approvals which include new mortgages, transfers of existing
mortgages between lenders, and refinances) will increase this year to $228B (foreacast) and slow in 2011 to $218B

Kelvin

The mortgage industry has weathered the perfect storm over the past 3 weeks as we’ve seen:

As a result, mortgage applications and deals have increased as some brokers are experiencing 20-25% of their full year’s volumes in just the past few weeks and once variable rates start moving that should also lead to another busy time.

So I was wondering – have Canadian mortgage consumer’s behaviour changed over these busy past few weeks?

I ran some stats today to see what the outcome was and specifically looked at:

RateSupermarket.ca was founded to provide transparency to a very complex mortgage industry. We are constantly working hard with our lender and broker partners to provide as much detailed information as possible in our Canadian mortgage rate comparison searches over and above the latest, update rate information. This includes further details such as prepayment privileges, portability, assumability and other options that are also important in determining which mortgage product is right for your own situation.

We are pleased to announce the latest update we’ve developed and released on the site is the “Details & offers” section in the mortgage rates search results as shown below:

Details & offers

The idea here is for our partners to include any specific details and special offers that are available for the mortgage rate their listing with us. Examples of details that can appear are:

• Quick closes – if the rate listed is a discounted special with a specific closing date needed (ie. within 30 days)
• Prepayment details – which outlines the amount stated in a percentage (%) that you can can prepay ahead of schedule without penalty both monthly and annually
• Usually stated as 20%/20% with the 1st term for monthly prepayments and the 2nd for annual prepayments
• So 20/20 or 20%/20% means you can over pay 20% of the mortgage over and above your monthly and annual payments respectively
• Special offers – such as free appraisals, if any closing costs are covered by the lender or broker and so on

We have also included the “Details & Offers” information on the best mortgage rates page, to help you see what is included with the best products on offer.

We hope you find this information useful and we will keep you updated as we add more features to try and make our comparison results as detailed and accurate as possible.

Happy mortgage shopping.

Kelvin

CMHC released its 2009 housing market overview and here are the main highlights:

July 2009 housing starts decreased

The seasonally adjusted annual rate1 of housing starts was 134,200 units in July, down from 137,800 units in June.

The decrease in July housing starts is mostly attributable to the volatile multiple starts segment. Most of the decline occurred in Ontario and Alberta, while in Quebec housing starts increased by 21.9% representing 8,300 new units.

Year-to-date actual starts in rural and urban areas combined decreased by an estimated 41.5% compared to relatively high levels during the first seven months of 2008. Actual urban single starts from January to July 2009 are down 38.2% compared to a year earlier while urban multiple starts are down 47.0% over the same period. On a year-to-date basis, actual total housing starts in urban areas have decreased by an estimated 43.5% when compared to the same period in 2008.

Growth in new house prices moderates in June

The New Housing Price Index (NHPI) fell by 3.3% in June compared to the previous year.

In comparing June 2009 to June 2008:

Declines were observed in:

MLS sales increased in July

The seasonally adjusted annual rate of MLS®1 (Multiple Listing Service®) sales increased to 510,468 units in July 2009, its highest level since November 2007, when the seasonally adjusted annual rate of MLS® sales reached 523,404 units. July sales were up 2.5 per cent compared to June.

Actual MLS® sales in July were up 18.2 per cent compared to the same period in 2008.

Demand for Variable Rate Mortgages Increased in 2008

Since 1998, variable rate mortgages have become increasingly popular. Among mortgage holders that participated in the Financial Industry Research Monitor (FIRM) survey conducted in December 2008, approximately 30 per cent opted for a variable rate mortgage, up from about 3 per cent in December 1998.

Home buyers in Canada have an array of mortgage products to choose from. The primary selection involves the choice of mortgage type, and term, which in turn has an impact on the mortgage rate.

An important choice facing borrowers is whether to “lockin” a rate for the mortgage term or to proceed with a variable rate. Fixed term 5-year mortgages have dominated the Canadian mortgage market for decades. Year after year, these mortgages remain the most popular type among Canadian homeowners, accounting for more than half of all mortgages. However, variable rate mortgages have become more prevalent in the market. Variable rate mortgages now account for about 30 per cent of all mortgages, up from 3 per in December 1998.

Variable rate mortgage products

A variable rate mortgage may be “open” or “closed”. An open mortgage can be paid off at anytime without an interest penalty, whereas for a closed variable rate mortgage, prepayment above an agreed upon threshold may result in an interest penalty.

Also, consumers have the choice
between floating variable rate mortgages and protected variable rate mortgages. A floating variable rate mortgage allows for a perfectly open and variable rate that moves in line with the prime rate. In the case of a protected variable rate mortgage, the borrower has some protection against rising interest rates; once the mortgage rate rises to some predetermined threshold the mortgage converts to a fixed rate mortgage for the remainder of the term.

Advantages and risks associated with variable rate mortgages

The choice between “fixed” and “variable” mortgage rates largely depends on personal circumstances and preferences of the borrowers. The interest rate charged on variable rate mortgages are generally lower than those on fixed rate mortgages,but they leave the borrower vulnerable to changes in the mortgage rates. Thus if a borrower is willing to absorb the risk of rising mortgage rates, he/ she might opt for a variable rate
mortgage product.

On the other hand, if a borrower wants the assurance of a fixed payment and peace of mind, he/she is more likely to choose a fixed rate mortgage
product.

According to the FIRM survey conducted in December 2008, thirty-eight per cent of homeowners with variable rate mortgages
expected to save substantially on interest costs over the longer term, up from twenty per cent in June 2002 (the last time the survey probed mortgage holders with the same questions). This was the most popular reason for choosing a variable rate mortgage in 2008.

Thirty-three per cent reported that variable rate mortgage offered the lowest interest rate, while twenty-six per cent selected a variable rate mortgage because they expected interest rates to be stable or decline. The latter was up from 17 per cent in June 2002.

The Bank of Canada aggressively cut its key lending rate in an effort to revive the national economy which led to a downward trend in mortgage rates during the second half of 2008. This contributed to the rising popularity of variable rate mortgages and has benefited borrowers. With the commitment of the Bank of Canada to hold the overnight lending rate stable through June 2010, borrowers with variable rate mortgages may continue to enjoy low monthly mortgage carrying costs, which can make these types of mortgages more attractive than fixed rate mortgages.

The interest rates charged on variable rate mortgages are tied to the chartered banks’ prime rate. Demand for variable rate mortgages, as measured by their market share, has varied inversely with the prime lending rate. Thus when the prime rate and subsequently variable mortgage rates decline, demand for variable rate mortgages rises.

The Canadian Mortgage Housing Corporation (CMHC) just released their latest Canadian Housing Market Outlook for Q2 2008. There are some intersting facts in the report, including:

Mortgage rates

Housing market

This view is shared by Scotiabank, as reported by Macleans who have been anticipating lower sales this year and more modest price increases,” said Warren, senior economist at Scotia Economics, after the bank forecast overall sales 15 per cent below last year’s record levels, with home prices increasing on average about five per cent

In light of this new information from CMHC we’ve updated our best mortgage rates for each province pages with the new data, so have a look.