Canadian Association of Accredited Mortgage Professionals releases
Annual State of the Residential Mortgage Market in Canada report
TORONTO, Nov. 8 /CNW/ - 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
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
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
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
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 www.caamp.org, 'Mortgage Industry', under 'Resources'.
Connect with us at: twitter.com/caampaccha, Facebook.com/caampaccha, Linkedin
Established in 1994, the Canadian Association of Accredited Mortgage
Professionals (CAAMP) is Canada's national mortgage industry
association. CAAMP has assumed a leadership role in the industry it
serves and has set the standard for best practices for Canada's
mortgage practitioners. In 2004, CAAMP created the Accredited Mortgage
Professional (AMP) designation as part of an ongoing commitment to
increasing the level of professionalism in Canada's mortgage industry.
As a membership-based organization, CAAMP strives to develop its network
of professionals and to represent the interests of these individuals to
government, media and consumers. CAAMP has attracted 12,000 members and
1,700 companies from across Canada - representing over 90% of Canada's
mortgage activity. CAAMP members make up the largest and most respected
network of mortgage professionals in the country. CAAMP's membership
base consists of mortgage lenders, brokers, insurers and other industry
SOURCE Canadian Association of Accredited Mortgage Professionals
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