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Inside the Mind of a Mortgage Shopper

July 15, 2021
4 mins
Young family cuddles with their dog on the couch in their new home

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.

Today's Lowest 5-Year Fixed RatesUpdated 09:22 ET on Feb 23, 2024

Rates are based on a home value of $400,000

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Verico - Fair Mortgage Solutions - Anson Martin
4.79%
Term
5 Yr Fixed
Loan to value
80.01% to 95%
Insurance
Insured
Rate held until
May 23
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4.84%
Term
5 Yr Fixed
Loan to value
80.01% to 95%
Insurance
Insured
Rate held until
May 23
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4.89%
Term
5 Yr Fixed
Loan to value
80.01% to 95%
Insurance
Insured
Rate held until
Mar 24

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.

Rob McLister

Rob McLister has been informing mortgage consumers and professionals since 2007. In that time, he’s written more than 2,500 mortgage stories for publications ranging from the Globe and Mail — where he presently serves as mortgage columnist — to the National Post, Maclean’s, Canadian Mortgage Trends and RateSpy.com. Regularly quoted throughout the media, Rob is a committed advocate of greater transparency in the mortgage industry. He’s also been a vocal consumer advocate for more sensible mortgage regulation. In 2011, he launched two mortgage fintechs: mortgage comparison website RateSpy.com and digital mortgage broker intelliMortgage Inc. The former is the go-to source of Canadian mortgage news and the only site comparing all publicly advertised prime mortgage rates. The latter is Canada's leading online mortgage provider for self-directed borrowers. Both companies were acquired in 2019 by RATESDOTCA Group Ltd.

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