For most people, talking about numbers isn’t the most intriguing of subjects. In fact, let’s face it; you’re very likely to see future cocktail invitations diminish if you become known reputedly as the numbers guy or gal.
Picture one of those semi-annoying, yet somewhat interesting characters that can quote you statistics from here to the moon with often-meticulous accuracy. Scary.
Yet, I’m the first to confess being an admirer of this analytical bunch. Why? I think instinctively we know that numbers when they’re understood, present our lives with order and a degree of clarity.
Tuesday of this week, the Canadian Association of Mortgage Professionals (CAAMP) released the results of its Annual State of the Residential Mortgage Market in Canada report.
It’s filled with rigorous analysis that often only the reputed numbers guy or gal could truly appreciate. Nonetheless, within its pages are gems easily understood and appreciated by ordinary folk. Take for example:
- First-time home-buyers on average contribute a 21 per cent down payment on the purchase of their new home; since the 1990s, about 40 per cent of this figure has come from personal savings, suggesting Canadians wait to be financially stable before purchasing.
- In recent years, as home prices have gone up, however, we have seen a significant chunk of that down payment, 17 per cent, come from family gifts or loans, a higher margin than in previous years.
- A large chunk of younger buyers (up to age 34) indicated they were waiting for prices to fall and savings to increase. At the other end of the age spectrum, more than two-thirds of those over 55 said they were renting because it was a better option for them. It is likely that the latter group is on a fixed income such as retirement savings or pension plans and shuns the risk of ownership.
- The average mortgage interest rate is 3.24 per cent, identical to what we saw in the spring survey and down from the average 3.5 per cent found in the fall 2013 survey.
- About 11 per cent of homeowners took equity out of their homes, using the money for debt consolidation and repayment, renovations, investments, purchases, including education, and “other”.
- The average amount is estimated at $55,000, total amount of equity takeout during the past year is estimated to be around $63 billion.
- About 425,000 live in homes that they purchased during 2014 (up to the time of this survey). The average price was just over $400,000, for a total value of $173 billion.
- About 125,000 Canadian homeowners fully repaid their mortgages during 2014 (up to the date of this survey). A further 50,000 to 75,000 expect to fully repay their mortgage before the end of 2014.
- In combination, about 190,000 mortgages will have been fully repaid during the year. About 900,000 current mortgage holders made lump sum payments in the past year, totaling
“Overall, the CAAMP fall report paints a picture of homeowners whether just starting out on their ownership journey or long time mortgage holders, as remarkably confident,” said Jim Murphy, AMP, President and CEO of CAAMP.
“They wait until they are financially stable before buying, and they take advantage of low interest rates to aggressively reduce their mortgage debt. Home ownership continues to be an important anchor for the Canadian economy.”
A tale of two resale markets
CAAMP’s research indicates that a drop in resale activity in slow growth regions east of Ontario has led to statistically significant job losses.
Chief Economist Will Dunning has been tracking the impact of the federal government’s tightening on mortgage lending since the summer of 2012.“Broadly speaking, resale activity has improved by 50 per cent from where it was in 2012,” Dunning said.
“However, resale activity lags in slow growth regions and that in turn undermines job creation in parts of the country which rely on the housing industry to generate employment.” Dunning estimates that the reduction of resale market activity has negatively affected employment leading to a loss of 29,000 jobs over the past two years.
“Since the housing market impacts have been greatest in the slow growth provinces, job creation impacts have been greatest in these provinces,” he said.