Report says Canadian economy losing housing market as a growth engine
TORONTO, May 22, 2013 /CNW/ - The Canadian Association of Mortgage Professionals (CAAMP) spring survey Change in the Canadian Mortgage Market, released today, warns of a weakening housing market with economic implications. On the one hand, the survey shows that the almost six million Canadians who own homes with mortgages are comfortable with their debt. On the other hand, data, collected by CAAMP and analyzed by Chief Economist Will Dunning indicates that government restrictions on mortgage borrowing have set the stage for a steady decline in new home building which will trigger job losses and a drop in housing related economic activity by 2015.
The consumer survey: Canadian mortgage holders
- An average 69 per cent have fixed rate mortgages
- Their average mortgage rate is lower - 3.52 per cent compared to 3.64 per cent last year
- Some 18 per cent of mortgage holders increased their mortgage payments in the past year. An additional 16 per cent made lump sum payments on their mortgages during the past year.
- About 8 per cent of all homeowners took out equity, averaging $48,000, similar to 2012
- 80 per cent of mortgages have an original amortization of no more than 25 years
- Most borrowers plan to repay early - the expected average is 21.6 years
- 85 per cent of mortgages taken out in the last year were fixed rate
"The CAAMP survey demonstrates that Canadians with mortgages are managing debt responsibly, negotiating low interest rates and paying down their mortgage faster than required," said Jim Murphy, AMP, President and CEO of CAAMP. "What is cause for concern is that the housing market, an important engine of growth for the Canadian economy, is slowing to such an extent that without any change, it could take another five years to recover."
The data and report: fewer sales, fewer housing starts, fewer jobs
- During the past nine months, the dollar value of housing resale activity was 8.3 per cent lower than during the year prior to the 2012 tightening of mortgage requirements
- Reduced house sale activity brings lower incomes and employment across industries directly and indirectly involved in sales, financing, legal services, moving, renovations, sale of furniture and appliances, landscaping etc.
- By April, seasonally adjusted rate of housing starts was down 15 per cent from the 2011/12 average (from 205,000 to 175,000 units)
- By mid 2015, CAAMP projects the total drop will be 25 to 30 per cent fewer housing starts, resulting in 150,000 fewer jobs
- In the Greater Toronto Area, housing starts are projected to slow to 2,000 per month (a 50 per cent drop) by late 2014, leading gradually to a loss of about 35,000 jobs by mid 2015.
- In Vancouver, monthly housing starts may fall by about a third, to about 1,100 a month leading to about 7,500 jobs lost
- The Calgary and Edmonton markets are healthier with housing starts likely to rise by about 100 per month in each city, generating about 2,500 new jobs in each city as well.
"CAAMP has argued that government efforts to slow the housing market have long term negative economic consequences and the data continues to support our assessment," said Dunning. "Until now, housing has played a major role in the recovery from the 2008/09 recession. That economic driver is disappearing as we see housing related jobs dry up and consumer confidence erode at a time when the national recovery is struggling to pick up steam."
The report, Change in the Canadian Mortgage Market is authored by Will Dunning. It is based on data compiled by Maritz Research Canada in a survey of more than 2,000 Canadian consumers in April 2013.
For a full copy of CAAMP's spring survey report, visit www.caamp.org.
CAAMP is the national organization representing Canada's mortgage industry. With over 12,000 mortgage professionals representing over 1,500 companies, its membership is drawn from every province and from all industry sectors. CAAMP is the leading provider of service and advocacy for its members and sets the standard for the Canadian mortgage industry. In 2004, CAAMP established the Accredited Mortgage Professional (AMP) designation to enhance educational and ethical standards for Canada's mortgage professionals.
CAAMP's other primary role is that of consumer advocate. On an ongoing basis CAAMP aims to educate and inform the public about the mortgage industry. Through its extensive membership database, CAAMP provides consumers with access to a cross-country network of the industry's most respected and ethical professionals.
SOURCE: Canadian Association of Accredited Mortgage Professionals
For further information:
Jim Murphy, AMP
President and CEO, CAAMP
O: 416-644-5465 / C: 416-940-0011
Jeri Brown, Media Profile