Consumers Cautious About Mortgage Debt

Monday, February 20, 2006

OTTAWA, Feb. 20 /CNW Telbec/ - Three-quarters of all respondents to the 2006 Mortgage Consumer Survey conducted by Canada Mortgage and Housing Corporation (CMHC) indicated that their goal is to pay off their mortgage as quickly as possible. Moreover, half agreed that, whenever possible, they would use extra money to pay down their mortgage.

"This study suggests that Canadians are fundamentally cautious when it comes to their mortgage debt," said Pierre Serré, Vice-President, Insurance Product and Business Development. "This is particularly true among young first-time homebuyers."

The survey also indicates that Canadians are well served by the mortgage industry with an overall satisfaction rate of 84 per cent. When asked about their preference for a mortgage provider, 86 per cent of respondents indicated that it is somewhat or very important that their lender be a Canadian institution.

Relationships with their current financial institutions are very important to recent mortgage consumers. While 2006 has seen a slight increase in the percentage of consumers who switch to another financial institution when renewing their mortgage, the majority of mortgage consumers remain loyal to their current lender.

Although the proportion of purchasers using the services of mortgage brokers has remained unchanged from last year's level of 27 per cent, the percentage of consumers who turn to mortgage brokers for renewal and refinance transactions increased in 2006.

A growing majority of Canadians (71 per cent) who refinanced their mortgage in the last year did so before the scheduled renewal time. Among those who refinanced, the most common reason was for home renovations and improvements, followed by reducing their overall interest costs.

CMHC's Mortgage Consumer Survey is conducted each fall to examine consumer behaviour, attitudes and expectations when acquiring, renewing or refinancing a mortgage. The survey is based on a national probability sample of active mortgage consumers comprised of first-time buyers, repeat buyers, mortgage renewers and refinance consumers. The results for the entire sample are accurate within 2.1 percentage points 19 times out of 20.

As Canada's leading mortgage insurer, CMHC shares a wealth of knowledge and housing expertise for the benefit of Canadians. CMHC's mortgage insurance has opened doors for millions of Canadians, giving them the assurance and piece of mind that comes with homeownership.

As Canada's national housing agency, Canada Mortgage and Housing Corporation (CMHC) draws on 60 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable homes - homes that will continue to create vibrant and healthy communities across the country.

Backgrounder

CMHC Mortgage Consumer Survey
Understanding today's Mortgage Consumer

Canada Mortgage and Housing Corporation (CMHC) is pleased to present key results from the 2006 survey of Canadian Mortgage Consumers. Since 1999, the annual consumer survey has provided a uniquely Canadian perspective into the changing attitudes and behaviours of mortgage consumers. The survey explores the dynamics of consumer choice, and mortgage shopping behaviour when arranging, renewing, or refinancing a mortgage. Consumer usage and attitudes towards both lenders and mortgage brokers are captured and analyzed. The survey is based on a national probability sample of active mortgage consumers comprised of first-time buyers, repeat buyers, mortgage renewers and refinance consumers. The results are accurate to within 2.1 percentage points 19 times out of 20.

Highlights from the 2006 CMHC Mortgage Consumer Survey include:

Paying Down Debt is a Top Priority

Seventy five per cent of respondents are in agreement with the goal of paying off their mortgage as quickly as possible.

Half of all consumers also indicated that whenever possible they would use any extra money they have to pay down their mortgage.

Canadians Well Served by the Mortgage Industry

Overall, the vast majority of mortgage consumers were satisfied with the services they received when arranging their mortgage and were equally satisfied whether they opted to deal directly with a lender or choose to use the services of a mortgage broker.

When dealing with a mortgage lender, an overwhelming majority of Canadian consumers feel that it is important that the mortgage lender be a Canadian institution and that the institution be well known to them.

Personal Connections are Important

The majority of respondents agreed that it is essential to have a personal relationship with a lender when negotiating a mortgage. Meeting with your current lender is the most common activity consumers engage in when shopping for a mortgage. A familiar lender loans officer is felt to be a reliable source of information (69 per cent use this source) and the majority who look to their present loans officer for guidance and information find the information provided to be useful (82 per cent).

Lender Loyalty Remains High

The majority of mortgage consumers continue to remain loyal to their existing lender. At the same time, in 2006 consumers showed a greater tendency to switch lenders when arranging, renewing or refinancing their mortgage.

Use of Mortgage Brokers:

The proportion of consumers using the services of a mortgage broker when buying a home has remained unchanged from last year's level of 27 per cent. Compared to previous years, an increased proportion of refinance and renewal customers have chosen to use a broker.

Refinancers Don't Wait to Renew

A large majority of Canadians who refinanced their mortgage in the last year, did so before the scheduled renewal time.

Renovations One of the Main Reasons for Refinancing

Reinvesting the funds back into the home through home renovations is the most common reason as to why consumers refinance their mortgage. Almost one-in-three of those refinancing used the funds to consolidate debt.

Related Links: www.cmhc.ca