Canada's Condominium Magazine

Canadians doing fine with their mortgages, debt: report

Semi-annual report on mortgage industry says that many Canadians are taking steps to pay off their mortgages as quickly as possible. 

Housing markets are stable and healthy in most of Canada …The mortgage lending environment is also stable and healthy.

These are the opening words of a report titled “Confidence in the Canadian Mortgage Market,” prepared for the Canadian Association of Accredited Mortgage Professionals by its chief economist, Will Dunning. The document contains a wealth of statistical data that give a good picture of the housing and mortgage markets at the present time, and a projection of what to expect in coming months.

The report’s key forecasts call for “healthy” growth in the critical areas of resale activity, new housing starts, and mortgage credit. On the latter point, the report forecasts growth of 8.5 per cent in 2012, based on projected housing starts of 191,500, followed by growth of 8.2 per cent in 2013, to service housing starts of 183,000.

The report’s analysis of mortgage types shows that the majority of Canadians of all age groups—roughly two-thirds—favour fixed-rate mortgages. Most (75 per cent) have mortgages with amortizations of 25 years or less.

Canada’s 5.85 million homeowners with mortgages owe, on average, $170,000 of principal. When you add the amount owed to banks for Home Equity Lines of Credit (HELOC), an average debt of $58,600, the total debt comes to about $1.15 trillion.

Canadians with mortgages have, on average, 49 per cent equity in their homes; those with HELOCs as well as mortgages have 41 per cent equity. A larger number, 83 per cent, have equity of 25 per cent or more.

About 5 per cent of homeowners have less that 10 per cent equity in their homes, including a small group who are under water (less than 1 per cent).

And Canadians really do like to pay off their debts: the report shows that as many as a quarter of homeowners with mortgages have increased their payment amounts, and almost as many have made lump sum payments. For those who made extra payments (see table above) they were able to cut as much as 38 per cent from the actual amortization time of their mortgages.

Overall, the picture is a positive one, showing that the majority of Canadians who have mortgages are taking advantage of low interest rates to get into the housing market, and are taking “prudent” steps to manage their debt and pay off their mortgages as quickly as possible.

 

Confidence in the Canadian Mortgage Market is a semi-annual review of the Canadian mortgage market. The report is based on information gathered by Maritz Research Canada in a survey of 2,000 Canadian consumers in April and May 2012. 

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