Latest Mortgage Industry Survey Results

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?

  • Down: 7%
  • Unchanged: 44%
  • Up: 49%

Mortgage rates:

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

  • Fall: 2% (vs 24% Spring 2009)
  • Neutral 27% (vs 53% Spring 2009)
  • Increase 70% (vs 23% Spring 2009)

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

  • For mortgages transacted during the past six months, the average rate is 3.63%
  • Among borrowers who renewed in the past year 74% (about 1 millionMortgage rate discounting:
  • Borrowers who took out a 5 year fixed mortgage in the past year had an average rate of 4.10%, while the average posted 5 year fixed rate was 5.57%
  • This means borrowers negotiated on average a discount of 1.46% below advertised rates
  • Mortgage brokers versus banksAmong the mortgage shoppers who took out a mortgage in the past year, they used the following sources:
  • Canadian bank: 50%
  • Mortgage broker: 30%
  • Other: 20%
  • Mortgage holders:
  • There are 9.3M home owners in Canada
  • This is equal to 28% of the population (33,311,400 according to the World Bank)
  • About 5.55M have mortgages, resulting in 3,800,000 (11%) Canadians owning their home mortgage free
  • 24% of home owners engaged in mortgaging activity in the past year:
  • Taking out a new mortgage on a home that was newly purchased or which previously did not have a mortgage (7%)
  • Renewing, refinancing or transferring an existing mortgage (17%)
  • Paying off an existing mortgage (3%)
  • Average outstanding principal is $138,000
  • Outstanding mortgage principals on primary residences = $770B
  • 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 typesFor mortgages transacted during the past year, the rate types were:
  • Fixed rates:65%
  • Variable or adjustable rates: 29%
  • Combination mortgages: 6%
  • These results are interesting as we typically find that for searches done on, 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:
  • 5 years+: 70%
  • 3-4 years: 21%
  • 2 years or less: 9%
  • For mortgages transacted during the past year, the amortization periods were:
  • 25 years or less: 64%
  • 25 years +: 36%
  • Housing market forecasts:Housing sector resale activity:
  • 2009: $149B
  • 2010 (forecast):$172B billion
  • 2011 (forecast): $163B
  • These housing market forecasts were used to forecast mortgage activity as well:Outstanding residential mortgage credit
  • 2007: 12.4%
  • 2008: 10.3%
  • 2010 (forecast): 8.5% ($82 billion)
  • 2011 (forecast): 8.7% ($91 billion)
  • Volume of outstanding residential mortgage credit in Canada will exceed $1 trillion in mid-2010The 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 $218BKelvin

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