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)

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