Privacy  
CanEquity Mortgage Canada
Canadian mortgage rates,
mortgage calculator & news.

Canadian Mortgage News

November 2006 National News Archive

 

Related Links:
National Archive
2006 Archive
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006


CanEquity Mortgage News RSS 2.0 Feed

CanEquity Mortgage News Atom Feed

About RSS and Atom Feeds

Portable Document Format Printable Version

Further 10% growth expected for Canadian mortgage credit in 2007

TORONTO, Ontario, November 08, 2006 — Canadians have every intention of keeping up the feverish pace of mortgage borrowing, adding an expected $78 billion by the end of 2007 to produce a total mortgage credit valued at $808 billion, according to a report released today by the Canadian Institute of Mortgage Brokers and Lenders (CIMBL). The information was gathered by Pollara in a phone survey in late September and analyzed in conjunction with Canadian housing analyst and CIMBL economist, Will Dunning.

Underpinning this growth in credit is the fact that 88 per cent of Canadians are satisfied with the terms of their mortgages, despite interest rate increases over the last year, as determined by CIMBL’s fall 2006 survey. Also supporting a projected 10 per cent growth in mortgage credit are rising house prices, a booming economy in western Canada and continued high numbers of new housing completions.

“The Canadian mortgage market remains exceedingly robust,” said Paul Grewal, Chairman of the Canadian Institute of Mortgage Brokers and Lenders. “The housing market remains very active overall in historic terms, setting new record levels of dollar volume sales. In addition, new lenders and mortgage insurers have entered the market increasing Canadians’ options for mortgage products,” Grewal added. “This will continue to fuel the mortgage market.”

The mortgage credit market is a big component of the Canadian economy. Outstanding Canadian mortgage credit was valued at $687 billion, mid-2006 (compared to $617 billion, mid-2005). Canadian mortgage credit is expected to grow by 10.8 per cent in 2006 for a year end total of $730 billion. Further growth of 10.5 per cent is forecasted for 2007 for a Canadian mortgage credit of $808 billion by year end. Approval activity in 2006 will be approximately $197.6 billion (8.5 per cent higher than in 2005). For 2007, approvals are forecasted to exceed $200 billion for the first time at $204.5 billion (3.5 per cent higher than in 2006).

“Competition is certainly a feature that shines through in this survey,” said Grewal. “More Canadians are consulting with mortgage brokers (31 per cent in 2006 vs. 25 per cent in 2005) whether they are taking out a new mortgage, or renewing or refinancing an existing mortgage. The average rate for current mortgage holders is 5.05 per cent – well below posted rates for the major lenders – which suggests that comparison shopping is working to their advantage.”

Residential mortgage lending in Canada is provided by a wide range of institutions. According to the September survey, chartered banks account for approximately three-fifths (59 per cent) of the outstanding residential mortgage credit. The data collected shows that NHA Mortgage Backed Securities have gained 2.0 per cent of the market in the same period.

Ontario accounted for nearly half the residential mortgage approvals in 2005, with 45 per cent of the market. British Columbia, Alberta and Quebec each accounted for more than 10 per cent of the nation’s mortgage activity. When asked if “now is a good or bad time to buy a home in your community”, Alberta and British Columbia were the only two provinces which said most definitely ‘no’ - Alberta: 70 per cent negative vs. 12 per cent positive; B.C.: 45 per cent negative vs. 25 per cent positive. The survey findings show that Canadians as a whole are exceptionally happy (or “comfortable”) with the current state of the housing market and their residential mortgages.

About CIMBL
Established in 1994, the Canadian Institute of Mortgage Brokers and Lenders (CIMBL) is Canada’s national mortgage industry association. CIMBL 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, CIMBL 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, CIMBL strives to develop its network of professionals and to represent the interests of these individuals to government, media and consumers. CIMBL has attracted over 9,500 members and 1,000 companies from across Canada – representing over 90% of Canada’s mortgage activity. CIMBL members make up the largest and most respected network of mortgage professionals in the country. CIMBL's membership base consists of mortgage lenders, brokers, insurers and other industry participants.

CIMBL’s other primary role is that of consumer advocate. On an ongoing basis CIMBL aims to educate and inform the public about the mortgage industry. Through its extensive membership database, CIMBL provides consumers with access to a cross-country network of the industry’s most respected and ethical professionals.

To ensure mortgage professionals are working towards the highest ethical and educational standards, CIMBL will become the Canadian Association of Accredited Mortgage Professionals (CAAMP) on May 1, 2007.

In late September and early October 2006, POLLARA conducted a telephone survey with 1,717 Canadians, including homeowners and renters. A sample of 1,717 Canadians ensures an accuracy of + 2.3%, 19 times out of 20.

A copy of the survey is available at www.cimbl.ca

For more information or to request an interview, please contact:

Andrea Ellison / Myra Reisler Jim Murphy
Media Profile
416.504.8464
andrea@mediaprofile.com
myra@mediaprofile.com

CIMBL
1-888-442-4625
416-385-2333, ext. 31
Cell: 416-940-0011
jmurphy@cimbl.ca

Survey Highlights and Key Findings

Mortgage Satisfaction

  • 88% of Canadians are satisfied with the terms of their current mortgage
    • Despite interest rate increases over the last year, the percentage of satisfied Canadians is essentially unchanged from last year’s 90% satisfaction rate as determined by CIMBL’s fall 2005 survey
  • Most common reason cited by Canadians for satisfaction was “good interest rates” by 67%, followed by mortgage “flexibility” (34% of respondents) – note: respondents selected more than one reason

Average Canadian Mortgage Rates

  • Average rate for current mortgage holders as of October 2006 is 5.05%
    • Compared to a rate of 4.62% in September 2005
  • The current mortgage rate of 5.05% is well below typical posted/advertised rates for the major lenders which suggests Canadians are shopping around, working with consultants and taking advantage of the substantial amount of discounting in the mortgage market
  • For those Canadians that initiated, renewed or refinanced in the past 12 months for five-year, fixed rate terms the average rate is 5.16%
    • In contrast, over the preceding 12 month period, the average advertised five-year mortgage rate was 6.54%, suggesting that Canadians are negotiating mortgage rate discounts averaging 1.38 percentage points (for five-year terms)

Negotiating a Mortgage

  • Among Canadians who renewed or refinanced over the past 12 months, 33% increased the amount of the mortgage and two-thirds did not – for those who increased the amount of the mortgage, the average increase is estimated at $26,100
    • This contrasts with CIMBL’s September 2005 survey that showed 40% of Canadians increased their mortgage by an average $25,100
  • Among those who renewed or refinanced over the past 12 months, 84% remain with the same lender and 16% changed lenders
  • Mortgage holders consulted an average of 1.91 mortgage professionals when taking out their mortgage
  • In this most recent survey, 31% of Canadians consulted with a mortgage broker when seeking a mortgage, an increase from 25% who consulted with a broker in 2005
  • Residential mortgage lending in Canada is provided by a wide range of institutions with chartered banks accounting for approximately three-fifths (59%) of the outstanding residential mortgage credit
  • However, recent data collected shows a shift in the market in the last 12 months for the provision of mortgages with shares falling for chartered banks, trust and mortgage loan companies, credit unions and caisse populaires, life insurance companies and non-depositary credit intermediaries and other financial institutions
    • NHA Mortgage Backed Securities have gained 2.0% of the market from a year ago

Characteristics of the Canadian Residential Mortgage Market

  • Outstanding Canadian mortgage credit valued at $687 billion, mid-2006 (compared to $617 billion, mid-2005)
  • Canadian mortgage credit will grow by 10.8% in 2006 for a year end total of $730 billion
  • Further growth of 10.5% is forecasted for 2007 for a Canadian mortgage credit of $808 billion by year end
  • The volume of new mortgage approvals has also been forecasted as follows:
    • During 2005 there was $182.1 billion in mortgage approvals for new and resale homes (this total includes new mortgages, as well as transfers between lenders and refinancing of existing mortgages)
    • Approval activity in 2006 would be approximately $197.6 billion (8.5% higher than in 2005)
    • For 2007, approvals are forecasted at $204.5 billion (3.5% higher than in 2006)
  • Ontario accounted for nearly half the residential mortgage approvals in 2005, with 45% of the market (finding unchanged from last year’s survey)
  • British Columbia, Alberta and Quebec accounted for more than 10% of the nation’s mortgage activity (findings unchanged from last year’s survey)

Consumer’s Expectations of the Canadian Housing Market

  • When asked “is now a good time or a bad time to buy a new home in your community”, responses were mixed across the country:
    • Most positive responses were given in Atlantic and central Canada
    • Most negative responses were provided in Alberta and British Columbia
      • In Alberta, negative responses were outweighed by positive responses by 70% to 12%
      • In British Columbia, negative responses outweighed positive responses 45% to 25%
        • The most common reason cited by Western Canadians was high house prices (68% of respondents)
        • Other factors frequently cited for the negative responders include “market conditions”, “availability”, “selection” and “demand”.
  • With regards to whether or not Canadians expect price reductions in the housing market, answers varied regionally:
    • The greatest degree of expectations for price reductions is in British Columbia, with one-fifth of respondents expecting housing prices to lower
    • The greatest expectations for housing prices to increase came from respondents in Alberta (53%); and expectations for price growth was also high in Manitoba and Saskatchewan (combined response of 49% for the two provinces)

News source: Canadian Institute of Mortgage Brokers and Lenders (CIMBL)

 

Top of page