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Canadians comfortable with their mortgage debt levels

One third have made additional payments in the last 12 months
Canadian Association of Accredited Mortgage Professionals releases
Annual State of the Residential Mortgage Market in Canada report
Toronto, ON (November 8, 2010) – Canadian homeowners are comfortable with their
mortgage debt, have significant home equity and could withstand an increase in their mortgage
interest rate, according to the sixth Annual State of the Residential Mortgage Market report from
the Canadian Association of Accredited Mortgage Professionals (CAAMP), released today.
Highlights:
• The vast majority of Canadians with mortgages are able to afford at least a $300
increase in their monthly mortgage payments.
• One in three (35 per cent) mortgage holders have either increased their payments or
made a lump sum payment on their mortgage in the last year.
• 89 per cent of Canadian homeowners have at least 10 per cent equity in their homes
and 80 per cent have more than 20 per cent equity.
• Overall home equity is at 72 per cent of the total value of housing in Canada; for
homeowners who have mortgages, equity level averages 50 per cent.
• As of August 2010, there was $1.01 trillion in outstanding residential mortgage credit in
Canada, an increase of 7.6 per cent from last year.
“Canadians are being smart and responsible with their mortgages,” said Jim Murphy, AMP,
President and CEO of CAAMP. “They are building equity in their homes and making informed,
long-term mortgage decisions. The survey results speak to the strength of our mortgage market,
especially when compared to the United States.”
Homeownership is a good long-term investment. Most Canadians agree that buying a home is a good long-term investment and are focused on their mortgages to support that investment. Many mortgage holders are making voluntary additional payments: 16 per cent have increased monthly payments during the past year, 12 per cent have made lump sum payments, and 7 percent did both.
Canadians are exercising caution when taking out their mortgages, with a majority choosing a
fixed-rate (66 per cent). A five-year fixed-rate mortgage remains the most popular option in
Canada. Despite the fact that variable rate mortgages have become much less expensive
compared to fixed rates, the majority choice is still fixed rates: this decision is based on people’s
individual assessments of risk, not just the cost difference. Potential rate increases won’t be a problem.
The CAAMP study found that a vast majority of Canadians have significant capabilities to afford
higher payments if and when mortgage interest rates rise. 84 per cent report that they could
weather an increase of $300 or more on their monthly payments.
Most of the people who have low tolerances for increased payments have fixed rate mortgages,
by the time their mortgages are due for renewal, their financial capacity will have expanded and
their mortgage principal will have been reduced.
Also, Canadians have been able to negotiate better than posted mortgage interest rates. For
five year fixed rate mortgages arranged in the past year, the average rate is 4.23%, which is
1.42 points lower than typical, advertised rates.
Of the 1.4 million Canadians who renewed their mortgage in the past year, 72 per cent were
able to renegotiate a decreased rate: on average, rates are 1.09 percentage points less than the
rates prior to renegotiating.
Canadians have significant equity in their homes, strengthening the housing market Canadians’ home equity is impressively high. Among homeowners who have mortgages, the
average amount of equity is about $146,000, or 50 per cent of the average value of their homes.
The amount of equity take-out in the past year is unchanged from last year with around one in
five homeowners, or 18 per cent, taking equity out of their home, at an average of $46,000. The
most common purpose for equity take-out is debt consolidation and repayment (45 per cent)
followed by home renovations (43 per cent), purchases and education (19 per cent) and then
investments (16 per cent).
The report is authored by CAAMP Chief Economist Will Dunning and based on information
gathered by Maritz Research Canada in a survey of Canadian consumers conducted in October

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