Half of non-homeowners in Canada shedding hope of shopping for property: MPC survey

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Practically half of non-homeowners in Canada assume they’ll by no means have the ability to buy a house, in keeping with new survey outcomes from Mortgage Professionals Canada (MPC).

That determine is up by 15 proportion factors from simply six months earlier, highlighting the continued affordability disaster with each dwelling costs close to their all-time peak and rates of interest at multi-decade highs.

In the meantime, simply 17% of non-owners say they’re planning to buy a main residence within the subsequent 24 months, a drop of 5 proportion factors from six months in the past, in keeping with MPC’s newest Semi-Annual State of the Housing Market report.

“Canadians are going through a housing affordability disaster with little signal of easing in sight,” stated Lauren van den Berg, President and CEO of MPC. “We hear this day-after-day from our members proper throughout the nation, and that’s the reason we proceed to advocate for insurance policies that break down the obstacles to homeownership.”

The survey outcomes additionally present that the present fee setting is having an influence on present owners. There’s been a tripling within the proportion of present house owners who’re contemplating promoting their dwelling as a result of they’ll now not afford their present mortgage.

Total, 64% of householders say rising charges are having a cloth influence on their monetary scenario, with almost a 3rd saying they’re frightened about lacking a cost, needing to promote or having to make a big life change to remain of their dwelling.

The extent of concern is heightened amongst first-time patrons, with 72% saying they’re involved and seven% pondering they are going to be compelled to promote.

Renewals are one other level of stress for a lot of debtors, particularly since 65% count on to resume their mortgage over the subsequent three years. Greater than two thirds (69%), say they’re anxious about their renewal, a rise from 63% simply six months in the past.

Perception into the mortgage market

The report offered a wealth of perception into different subjects, resembling mortgage product preferences, mortgage dealer share and consumer loyalty.

Mortgage dealer share rose two factors in comparison with final 12 months, with 31% of respondents saying they used the companies of a mortgage dealer. That proportion rises to 38% who stated they’d select a dealer in the event that they had been searching for a mortgage at present.

By way of mortgage merchandise, mounted charges as soon as once more dominate client desire, with almost three quarters (72%) of excellent mortgages now with a hard and fast fee. Amongst new originations as of Might, simply over 7% of debtors selected a variable fee.

Debtors are additionally more and more gravitating in the direction of shorter phrases, with one in 5 debtors (21%) choosing a time period of 1 to a few years on the expectation that charges will begin to fall.

5-year phrases, nonetheless, stay the most well-liked time period size, representing 61% of mortgages taken out up to now two years.

Survey highlights: The mortgage market

Mortgage Sorts

72% of mortgage holders had a fixed-rate mortgage as of mid-2023
23% of mortgage holders had a variable fee
- For brand new mortgage originations as of Might, simply 7.4% took a variable fee, down from the height share of 57% in January 2022
3% of debtors have a hybrid (half-fixed, half-variable) mortgage

Variable-rate mortgages

60% of variable-rate holders report having an adjustable-rate mortgage, that’s, one the place the funds fluctuate as prime fee rises or falls.
- The opposite 40% have fixed-payment variable-rate mortgages, the place the month-to-month cost stays fixed, however as charges rise much less of the month-to-month cost goes in the direction of principal compensation and a higher portion goes in the direction of curiosity prices.
40% of variable-rate debtors plan to lock in to a hard and fast fee.
- One other 29% say they’re contemplating switching to a hard and fast fee.
- And 1 / 4 (27%) stated they received’t contemplate switching to a hard and fast fee.

Mortgage phrases

Amongst mortgages taken out within the final two years:
- 61% had a time period of 5 years
- 14% had a 3-year time period
- 6% had a 2-year time period
- 7% had a 4-year time period
Causes for selecting a shorter time period included:
- 61% count on charges to fall
- 39% merely opted for a time period with a decrease fee
First-time patrons (25%) are selecting shorter phrases (1 to three years) extra usually than non-first-time patrons (15%)

Mortgage prepayments

39%: Proportion of mortgage holders who voluntarily take motion to shorten their amortization intervals (down from 45% in 2022)
- These in Ontario (36%) and B.C. (35%) are most probably to be paying greater than the required quantity on their mortgage
- Mortgage dealer shoppers are extra accustomed to the prepayment choices out there to them in comparison with financial institution shoppers (66% vs. 61%)
Amongst prepayment actions taken:
- 30% made a lump-sum cost (up from 19% final 12 months)
  - The common lump-sum cost: $21,502
- 37% elevated the quantity of their cost (up from 18%)
  - The common cost enhance: 611 monthly (up from $583 a month, final 12 months)
- 33% elevated their cost quantity and made a lump sum cost

Renewals

65% of mortgage holders count on to resume their mortgage throughout the subsequent three years
- Of these:
  - 9% count on to resume within the subsequent 6 months
  - 10% count on to resume their mortgage throughout the subsequent 6 to 12 months
69% say they’re anxious about their renewal (up from 63% six months in the past)
- 78% for first-time debtors
- 87% for new-to-Canada debtors
78% of mortgage dealer shoppers say their plan to make use of the identical mortgage skilled for his or her upcoming renewal
80% of respondents plan to stay with their present mortgage lender

Mortgage penalties

11% of debtors paid a penalty to interrupt their most up-to-date mortgage
- 80% stated they didn’t pay a penalty and 9% stated they don’t know
49% of those that paid a penalty stated they mentioned it with their mortgage skilled
- 33% stated they didn’t talk about it and 18% don’t know

Dealer share

31% of mortgage debtors used the companies of a mortgage dealer once they obtained their mortgage
- Up two factors from final 12 months
- First-time patrons (42%) are most probably to make use of the companies of a mortgage dealer, in addition to these between the ages of 18 and 42 (41%) and people in Alberta (39%) and B.C. (34%).
- These in Manitoba and Saskatchewan (21%) are least possible to make use of a mortgage dealer
38% of respondents stated they’d select a dealer in the event that they had been searching for a mortgage at present.
1 / 4 (25%) of those that obtained their present mortgage from a financial institution stated they’d flip to a dealer for his or her subsequent mortgage.

Reverse mortgages

Simply 6% of Canadians say they’re “very” accustomed to reverse mortgages, whereas one other 24% say they’re “considerably” acquainted
- A full third (34%) stated they aren’t conscious of reverse mortgages
38% of respondents say they wouldn’t contemplate a reverse mortgage, whereas one other 33% stated they aren’t more likely to contemplate one
The most important causes respondents stated they’d contemplate a reverse mortgage embody:
- sudden bills (25%)
- to permit them to remain of their dwelling (24%)
- to complement retirement revenue (22%)
- for funding functions (21%)