Knowledge Is Power To Canadian Mortgage Shoppers
Canadians want to take a savvier approach to the mortgage process, valuing research resources and advice from mortgage professionals, according to the latest survey released by The Canadian Mortgage and Housing Corporation (CMHC).
The 2013 Mortgage Consumer Survey included the responses from 2,951 consumers who had completed a mortgage transaction within the past 12 months. The findings show consumers are becoming increasingly willing to research additional mortgage options to get a better deal, resulting in a shift in lender loyalty and online shoppers.
The Internet Is a Powerful Mortgage Tool
The lowest mortgage rate continues to be the main motivation for shoppers and they’re heading online to find it; CMHC found that a full 84 per cent of mortgage shoppers searched online for the best interest rates, while 63 per cent also turned to the Internet to learn more about their additional mortgage options. In total, 59 per cent of all mortgage buyers compared their mortgage rates in some manner.
The study found that the typical online mortgage shopper visits an average of 4.6 lender sites when seeking out their mortgage options, and will actually contact an average of 2.9 to discuss their rates further.
Mortgages Go Mobile
Mortgage specific apps and mobile sites also saw an increase in use to 19 per cent of all buyers. The top download: mortgage calculators! Nearly two thirds of online mortgage shoppers used a mortgage calculator, mainly for the purpose of determining their future mortgage payments. Four in 10 used a calculator app to compare two mortgage rates head to head, while another 36 per cent used on to see just how much mortgage they could afford.
The study also found that mortgage shopping is becoming an increasingly social activity; 14 per cent of all online shoppers also used social media like Facebook and online forums (at 40 per cent of activity each) to further narrow their mortgage searches. Not surprisingly, the younger first time buyer demographic leads this behaviour – 26 per cent of buyers under the age of 34 liked or tweeted their way to information about their best rate.
Lender Loyalty Is Changing
The study found that first time buyers are most likely to switch from their home bank to a new lender if it meant getting a lower mortgage rate – only 54 per cent said they would choose to stick with the old and familiar. Renewal consumers were most likely to stay with their first lender, at 88 per cent. Refinancing consumers and repeat home buyers were each 68 per cent likely to stay with their current lender.
Filling The Mortgage Knowledge Gap
Canadian mortgage buyers value knowledge – and they’re looking to learn as much as they can about their mortgage options before signing that dotted line. Seven out of 10 buyers said they researched the full terms and conditions of mortgage products, and 60 per cent further explored the pros and cons of certain mortgages. In all, 63 per cent say they feel confident they scored the best rate for their mortgage.
However, while these buyers felt generally confident about their mortgage knowledge, there is still perceived room for improvement, meaning advice from pros like mortgage brokers is generally well received.
Ninety per cent of those polled said the advice they received during their mortgage research proved to be helpful.
The most common advice doled out to mortgage seekers:
- How to choose the right mortgage term
- Deciding between a fixed or variable rate mortgage
- The recommendation to accelerate mortgage payments in order to save more over the amortization.
Mortgage Brokers Popular With First Time Buyers
While one in five buyers said they contacted at least one lender and one broker during their mortgages search, first time buyers are using the services of pros in droves; 49 per cent of all mortgage originations among this group result from mortgage brokers. Thirty four per cent of repeat buyers used a broker to find their rate, while 17 per cent of mortgage renewals used a pro. Brokers also had a lasting positive impression on buyers: 70 per cent say they would recommend the broker they used to a family member or friend.