Inside the Mind of a Mortgage Shopper

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Featured, Mortgages

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.

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.