Canada Mortgage and Housing Corporation’s 2007 Mortgage Consumer Survey shows that 78 per cent of Canadians who recently purchased a new home intend to pay off their mortgage as quickly as possible.
“The study confirms that Canadians remain fundamentally cautious when it comes to their mortgage debt,” said Pierre Serré, vice-president of Insurance Products and Development for CMHC. “The fact that new homeowners are working to pay down principal early and are accelerating payments is a good indication that this responsible behaviour will continue throughout the life of their mortgage.”
The 2007 survey primarily focused on recent purchasers and for the first time included questions on homeowner behaviour regarding mortgage debt re-payment since arranging their mortgage.
More than half of recent purchasers agreed that, whenever possible, they would use extra money to pay down the principal on their mortgage. CMHC’s survey revealed recent purchasers are acting on these intentions, with one-third at some point having made a lump sum payment to their mortgage.
Also, well over half reported making weekly or bi-weekly payments, and the majority of these (84 per cent) are being made on an accelerated basis, which has the effect of shortening the original amortization period.
CMHC’s survey also indicated that Canadians continue to be well served by the mortgage industry, with 85 per cent of respondents expressing satisfaction with the mortgage process. Eighty-four per cent felt they had access to suitable housing options, 88 per cent felt confident they could manage their debt and 89 per cent of recent purchasers felt that the mortgage choice they made was the best option for them.
Relationships with financial institutions remain very important to mortgage consumers. Last year saw a slight increase in mortgage consumer loyalty — on average, 74 per cent of those surveyed indicated they were going to stay with their current lender.
However, the increase was most pronounced among first-time purchasers and those who refinanced their mortgage.
The majority of those who chose to switch to another financial institution when arranging their mortgage did so to obtain a better interest rate, but those who stayed with their existing lenders cited both a good interest rate and good service as the predominant reasons.
In addition, the proportion of purchasers using the services of mortgage brokers has risen to 33 per cent from last year’s level of 27 per cent.
The survey also found that mortgage consumers act quickly when they decide to buy a home and the majority want their mortgage representative to understand their total borrowing needs.
Fifty-four per cent of those surveyed indicated they signed mortgage agreements within a month or less after deciding to buy a home.
CMHC’s Mortgage Consumer Survey is conducted each fall to examine consumer behaviour, attitudes and expectations when acquiring, renewing or refinancing a mortgage.