Canada has 6.08 million households with mortgages. If you’re curious what kinds of mortgages they pick, Mortgage Professionals Canada (MPC) has some stats for you.
As Canada’s national mortgage broker association, MPC does surveys annually. It just released this report on the mortgage market, and it’s chock full of stats. Here were some highlights…
Fixed vs. variable rates
Fixed terms held on to their title as the most popular mortgage type in 2020. A full 77% of purchases financed in 2020 had a fixed rate. Interestingly, that’s down from 85% for 2019 purchases. Did Canadians anticipate falling rates earlier this year?
Looking at a breakdown of all mortgages outstanding, 73% have chosen to lock in while 22% are floating their rate.
Just 5% of borrowers chose a hybrid rate, which is consistent with previous years. A hybrid rate is usually 50% fixed rate and 50% variable. You get part of the security of a fixed rate and the rate savings of a variable all in one. In a choppy rate market, hybrids are a great way to hedge risk, but they’ve never been popular.
Mortgage rates in 2020
According to the report, the average mortgagor had an interest rate of 2.60% last year. That’s down from 3.14% in 2019. In other words, a mortgage shopper with the average Canadian mortgage balance (about $300,000) could save over $1,500 a year in interest thanks to falling rates.
When it comes specifically to purchases made in 2020, rates were even lower with 2.37% being the average fixed rate and 1.93% being the average variable.
Meanwhile, the average discounted 5-year fixed rate (the most popular mortgage product in Canada) obtained in 2020 was 2.25%. That was more than two percentage points below the average posted rate—A.K.A. “stress test” rate—of 4.95% (it’s currently 4.79%). It’s those big discounts that banks use against borrowers to charge them such high interest rate differential penalties when breaking a fixed mortgage early. (See: “Beware. As Rates Drop, Mortgage Penalties Don’t”)
For those whose mortgages came up for renewal last year, a large majority (84%) were able to renew at a lower rate. Those renewers had an average outstanding mortgage balance of about $245,000. That’s only 56% of the average mortgage used to buy a home.
Rates are based on a home value of $400,000
Other mortgage market tidbits
- 54% of homebuyers who obtained a mortgage in 2020 dealt directly with a Canadian bank
- vs. 40% who got their mortgage through mortgage brokers
- vs. 3% through credit unions
DOT Tip: At any given time, a bank, broker or credit union can have the lowest rates for the particular mortgage you need. Savvy mortgage shoppers compare them all, and we try to make that easy for you.
- 1 in 13 (7.7%) of Canada’s 10.01 million homeowners took equity out of their home in the past year
- The average equity take-out was $96,800 (the more home prices go up, the more people have to take out, and vice versa, of course)
- 33% of mortgage holders took voluntary action to pay down their mortgage and shorten their amortization
- The average lump-sum payment made was $26,700, less than 10% of the average mortgage size (the moral: most people shouldn’t overpay for 20% prepayment privileges)
- Among those who optionally increased their regular payments, the average payment increase was $470 a month
