The State of Mortgage Consumers Across Canada

According to a 2021 mortgage consumer survey, the pandemic played a significant role in terms of influencing the attitudes, expectations and behaviour of mortgage holders. 

Impact of the pandemic

In terms of the effect of the pandemic on purchasing decisions, the survey found that 37% of respondents said the location of the property mattered. 

What about the First-Time Home Buyer Incentive? According to the survey, 72% of those surveyed were aware of it. This incentive pertains to a Canada Mortgage and Housing Corporation (CMHC) program that helps individuals with homeownership in terms of affordability. Those who qualify for the incentive can reduce their mortgage payments while not being subjected to additional financial burdens. 

As for the uncertainties associated with the purchase of homes amid the pandemic, the survey found that 46% of respondents expressed concerns during the process of purchasing a property. Meanwhile, 31% of those Canadians surveyed said they got involved in a bidding war. Moreover, 25% of respondents revealed that they bought a home sooner than expected.

Family members and realtors

In terms of family members and realtors, the survey noted that they were the most valuable people in regard to the process of purchasing a home. Family members were at 17%, while realtors contributed to 37%. 

This was shown through the 65% of home buyers who paid the highest prices they could afford in order to make their purchases. Mortgage brokers were also seen in high regard, as 85% of those surveyed felt that the brokers would provide them with the best deal or mortgage rate. As for financial institutions, 61% of those who were first-time buyers took out a mortgage with their current bank. 

Mortgage consumers, at 85%, also had confidence in terms of homeownership as a viable financial investment for the long term. A significant percentage of consumers, at 70%, planned to do renovations within the next five years as well. A high level of confidence was also present among 84% of mortgage consumers, as they believed in their ability to make future mortgage payments.

Outlook for mortgage consumers

The demand for mortgages amid the pandemic arrived alongside an increase in questions about mortgage payments. Keeping up with the latest real estate trends and how they affect the finances of those purchasing homes requires in-depth knowledge of the risks and factors related to mortgage debt as well. 

Other factors that can help mitigate mortgage issues should be considered. For instance, an increase in household wealth combined with lower credit balances of consumers can aid in deferring financial burdens. Moreover, when mortgage lenders and borrowers take credit scores into account, they should look into stress-testing requirements before making any final decisions.

Note that despite the popularity of mortgage credit, low-interest rates contributed to the lower cost of debt. However, the interest rates may increase over the next few years alongside the return of debt service burden going back to pre-pandemic levels. This may also mean that consumer spending may go back to pre-pandemic levels. Therefore, homebuyers should plan ahead when it comes to future mortgage rates.