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Canadians comfortable with their mortgage debt levels; One third have made additional payments in the last 12 months Canadian Association of Accredited Mortgage Professionals releases Annual State of the Residential Mortgage Market in Canada report  

Toronto, ON (November 8, 2010) – Canadian homeowners are comfortable with their mortgage debt, have significant home equity and could withstand an increase in their mortgage interest rate, according to the sixth Annual State of the Residential Mortgage Market report from the Canadian Association of Accredited Mortgage Professionals (CAAMP), released today.

• The vast majority of Canadians with mortgages are able to afford at least a $300 increase in their monthly mortgage payments.
• One in three (35 per cent) mortgage holders have either increased their payments or made a lump sum payment on their mortgage in the last year.
• 89 per cent of Canadian homeowners have at least 10 per cent equity in their homes and 80 per cent have more than 20 per cent equity.
• Overall home equity is at 72 per cent of the total value of housing in Canada; for homeowners who have mortgages, equity level averages 50 per cent.
• As of August 2010, there was $1.01 trillion in outstanding residential mortgage credit in Canada, an increase of 7.6 per cent from last year.
“Canadians are being smart and responsible with their mortgages,” said Jim Murphy, AMP, President and CEO of CAAMP. “They are building equity in their homes and making informed, long-term mortgage decisions. The survey results speak to the strength of our mortgage market, especially when compared to the United States.”
Homeownership is a good long-term investment
Most Canadians agree that buying a home is a good long-term investment and are focused on their mortgages to support that investment.
Many mortgage holders are making voluntary additional payments: 16 per cent have increased monthly payments during the past year, 12 per cent have made lump sum payments, and 7 per cent did both.
Canadians are exercising caution when taking out their mortgages, with a majority choosing a fixed-rate (66 per cent). A five-year fixed-rate mortgage remains the most popular option in Canada. Despite the fact that variable rate mortgages have become much less expensive compared to fixed rates, the majority choice is still fixed rates: this decision is based on people’s individual assessments of risk, not just the cost difference.
Potential rate increases won’t be a problem
The CAAMP study found that a vast majority of Canadians have significant capabilities to afford higher payments if and when mortgage interest rates rise. 84 per cent report that they could weather an increase of $300 or more on their monthly payments.
Most of the people who have low tolerances for increased payments have fixed rate mortgages, by the time their mortgages are due for renewal, their financial capacity will have expanded and their mortgage principal will have been reduced.
Also, Canadians have been able to negotiate better than posted mortgage interest rates. For five year fixed rate mortgages arranged in the past year, the average rate is 4.23%, which is 1.42 points lower than typical, advertised rates.
Of the 1.4 million Canadians who renewed their mortgage in the past year, 72 per cent were able to renegotiate a decreased rate: on average, rates are 1.09 percentage points less than the rates prior to renegotiating.
Canadians have significant equity in their homes, strengthening the housing market
Canadians’ home equity is impressively high. Among homeowners who have mortgages, the average amount of equity is about $146,000, or 50 per cent of the average value of their homes.
The amount of equity take-out in the past year is unchanged from last year with around one in five homeowners, or 18 per cent, taking equity out of their home, at an average of $46,000. The most common purpose for equity take-out is debt consolidation and repayment (45 per cent) followed by home renovations (43 per cent), purchases and education (19 per cent) and then investments (16 per cent).
The report is authored by CAAMP Chief Economist Will Dunning and based on information gathered by Maritz Research Canada in a survey of Canadian consumers conducted in October 2010.
The CAAMP survey report contains a wealth of industry information, including consumer choices and borrowing behavior, opinions on current “hot topics” related to housing and mortgages, regional breakdowns of responses, and an outlook on residential mortgage lending.
For a copy of the report, please visit, ‘Mortgage Industry’, under ‘Resources’.
Courtesy of Canadian Association of Accredited Mortgage Professionals.

The B.C. housing market is forecast to stabilize next year, resulting in housing starts close to their ten-year average. Growth in employment and incomes, as well as low mortgage interest rates, will continue to bolster the resale market next year. Following a more stable resale market, starts will be in the range of 21,600 to 29,800 homes next year. The forecast range reflects the potential variability in the economic outlook next year.
Stronger-than-expected economic growth or lower-than-expected mortgage rates would result in housing starts in the upper end of the range. The point forecast of 25,900 starts in 2011 is slightly higher than the projected 25,500 starts expected this year.
Full-time employment growth this year will fuel demand for homeownership next year. Average weekly wages in the province are increasing at a pace faster than the national average. The strong job market compared to other provinces is a key contributing factor to a rising trend in interprovincial migration.
New home construction will increase to meet demand generated by growth in the number of households. CMHC estimates that between 28,000 and 30,000 households will be added in British Columbia on an annual basis this year and next, a level above the number of housing starts. Builders are expected to increase housing starts to meet this demand as resale market conditions improve next year.
Resale market conditions have been volatile during the last two years, but are expected to stabilize as the economy experiences positive economic factors. The number of resale transactions has been trending lower and will stabilize during the remainder of 2010. Average home prices are forecast to move lower during the second half of 2010 reflecting buyers' market conditions.
Modest growth in home prices is expected during 2011. In 2011, the annual average MLS® price in B.C. will be similar to 2010, reflecting an ample supply of homes for sale early in the year. Relatively stable mortgage interest rates and lower home prices early in 2011 are forecast to contribute to increased resales next year.
In Detail
Single Starts: The annual level of single-detached hom starts will be on par with the ten-year average this year and next. Competition from well-supplied resale market will dampen the level of single-detached home starts during the next six months.
Multiple Starts: Apartment condominiums, row and townhouse starts are trending higher and are forecast to reach 14,700 units next year. The focus remains on smaller more phased projects.
Resales: The number of existing homes sales recorded on MLS® is expected to increase next year. The forecast is that resales will remain in line with job and population growth, approaching 80,000 resales in 2011. This following a dip to the 75,000 resales level this year.
Prices: The average MLS® resale price in B.C. will reach $486,000 by the fourth quarter of 2010, down from $492,619 at the end of 2009. Resale market conditions are forecast to move towards balanced demand and supply in 2011 as new listings are absorbed and resale demand is rejuvenated by growth in employment and real income. Resale prices are expected to increase modestly during 2011, but the annual average will be close to his year's average price.
 Compliments of the CMHC Housing Market Outlook, Fourth Quarter 2010.
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