One of the more interesting mortgage reports each year — if you find mortgage reports interesting — is CMHC’s Mortgage Consumer Survey (MCS). Canada's housing agency just released a new one and it gives a glimpse of what mortgagors have been thinking since the pandemic began.
Here are some highlights.
1) COVID’s Impact on Mortgages
14% of those with mortgages said they “struggled” to maintain their scheduled mortgage payments during COVID.
2) What Homebuyers Pay
A whopping 65% of buyers said they paid the most they could afford for their home.
8% of buyers paid over $1 million for their property. 63% paid under $500,000.
The MCS also found that, among homebuyers:
- 31% paid less than 20% of their home purchase price as down payment
- 37% paid more than 20% of their home purchase price as down payment
- 29% paid exactly 20% of their home purchase price as down payment
- 3% did not answer or forgot.
3) The Bidding Process
31% of buyers said they were involved in a bidding war. Almost half said they paid too much over the original asking price.
66% said that every homebuyer should be able to see the bids submitted by others. But here’s the kicker: 45% said they’d be less inclined to use a real estate agent if bidding were completely transparent. That’s a pretty big disincentive for the real estate industry to improve transparency.
Rates are based on a home value of $400,000
4) Why People Get Mortgages
Most mortgages are renewals (63%) and refinances (18%). The #1 reason people refinanced in the past year was to consolidate debt.
Only 17% of mortgages in the past year were to buy a home, 53% of which were from first-time buyers.
Four out of 10 mortgage consumers got default insurance.
5) FTHBI Awareness
According to CMHC, 72% of first-time buyers were aware of the First Time Home Buyer Incentive (FTHBI), but 74% said they’d rather keep all their equity appreciation than “give part of it to the government.”
6) Where People Get Mortgage Info
The most common source was lender websites. 39% of mortgagors used them. The second-most common source (30%) was rate comparison websites.
42% said they used a mortgage broker to negotiate their mortgage. The 85% who did, did so because they thought a broker would get them the best deal. Brokers provided borrowers with three mortgage offers on average, but usually just one or two offers.