Consumer Rules

I have just read the Annual State of the Residential Mortgage Market in Canada, published in November 2010 prepared for the Canadian Association of Accredited Mortgage Professionals by Will Dunning CAAMP Chief Economist. It’s a heavy tome, with lots of statistics of interest to mortgage professionals and consumers alike.

 

There is a couple of remarkable statistics which indicate a significant sea change in only a few years.

 

• For the very first time, more people obtained a new mortgage from a mortgage broker than from a bank. 40% from mortgage brokers, 39% from banks. Other lenders such as credit unions and insurance companies make up the rest of arranged mortgages. More people trust mortgage brokers to get their best deal than banks! That’s a pretty big deal, where up until recently people used mortgage brokers only when they couldn’t obtain a mortgage from a bank. So the industry has to be happy with this statistic, although we shouldn’t rest on our laurels too much. There is still 60% of the market using other people to arrange their mortgages, but it is a good start. 
• Canadians have a peculiar belief that everyone except themselves has too much debt... the author writes: 

1. In particular, Canadians largely agree with the proposition that “As a whole, Canadians have too much debt”.
2. On the other hand, among Canadians who have mortgages, few agree that they “regret taking on the size of mortgage I did”.
3. These answers portray opinions that other people have taken on too much debt, but as individuals most are comfortable with the debts that they have taken on. It does appear that at a macro level, Canadians have taken on too much debt, but at a micro (individuals) level, the evidence is less clear. CAAMP’s previous research on mortgage indebtedness has found that Canadians – both borrowers and lenders – have been prudent with regard to mortgages.
4. It might be that the fearful opinions about overall debt have been influenced by statements in the media, more so than by the actual behaviour of Canadians.

 

• 40% of Canadians own their homes without mortgages. Canadians own approximately 50% of the equity in their homes.
• Canadians still believe that real estate is a good long term investment in the future.

Canadians have a lot more faith in real estate and their ability to handle mortgage debt than do our politicians.  Also, those people who think that the sky about to fall are simply out of touch with the mood of the public in Canada.