Growing financial anxiety is affecting both Canadian mortgage holders and non-owners alike, according to the latest consumer survey from Mortgage Professionals Canada.

Of mortgage holders facing renewal in the coming 12 months, 76% say they are anxious about the process, marking a 10 percentage point increase from last year, according to the association’s Semi-Annual State of the Housing Market Report.

Additionally, 70% of Canadians expressed concern about their family’s financial situation in the coming months, up seven percentage points from last year.

“Canadians are grappling with an unprecedented housing affordability crisis, exacerbated by ongoing high interest rates and economic uncertainty,” said Lauren van den Berg, President and CEO of MPC. “Our findings highlight the urgent need for policies that address these challenges and support both current and aspiring homeowners. We remain committed to advocating for measures that will make homeownership more accessible and sustainable for Canadians.”

The concern extends beyond current homeowners. More than half (51%) of non-owners now believe they will never purchase a home, a sharp increase from 18% two years ago. Meanwhile, just 16% of non-owners say they are planning to buy a principal residence within the next 24 months, down seven points from last year.

MPC’s semi-annual consumer survey results are based on a sampling of nearly 2,000 Canadians and was conducted by Bond Brand Loyalty earlier this year.

Consumer sentiment may be turning a tide

Despite heightened near-term anxiety caused by renewals at higher interest rates and economic uncertainty, Canadians largely believe the current economic situation will start to improve over the coming year.

That optimism is likely to grow further now that the Bank of Canada has delivered what is expected to be the first of several rate cuts this year.

Of those renewing in the next 12 months, more than half (52%) are optimistic about the economy in the coming year, up two points from the previous year. Although, that’s still down 18 points from pre-pandemic norms.

And despite the current high-interest rate environment, approximately 80% of respondents continue to see real estate as a good long-term investment, a seven-point increase from last year.

Additionally, 77% classify a mortgage as “good debt,” up from 68% last year, and more than 9 in 10 say they are happy with their decision to become homeowners.

“Despite the current challenges, Canadians’ confidence in real estate as a sound long-term investment remains strong,” said Joe Jacobs, Chair of MPC’s board of directors. “This enduring belief underscores the importance of working with a mortgage professional.”

Broker market share continues to rise

And that’s exactly what more Canadians are doing, with the survey confirming a growing share of borrowers turning to mortgage brokers for their home financing needs.

More than a third (34%) of homebuyers used a mortgage broker for their most recent mortgage, up four points from last year.

Mortgage broker share is even higher among first-time buyers (46%) and those who purchased in the past two years (45%). Regionally, those in Ontario (40%; +10 pts.) and Quebec (40%; +6 pts.) are most likely to work with a broker.

And when it comes to future intentions, 62% of respondents said they are somewhat or very likely to work with a mortgage broker.

The mortgage market

Mortgage types

• 70% of mortgage holders had fixed-rate mortgages in 2023 (+1 pt. from 2022)
  • 12% said they locked in from a variable rate within the past 12 months
• 23% of mortgages have variable or adjustable rates (-2 pts.)
  • 28% of variable-rate borrowers said they had considered locking in a fixed rate but decided not to
• 3% of borrowers have a combination of fixed and variable, known as “hybrid” mortgages (unchanged)

Mortgage terms

• 57% of mortgage holders have a 5-year term
• 10% have a 3-year term
• 6% have a 4-year term
• 4% have a 2-year term

Down Payments

• 60%: Those who wouldn’t have been able to afford their home without assistance with their down payment (-1 pt. from 2022)
• $70,578: The average down payment made by all buyers last year (-$1,614 from 2022)

The top sources of down payment funds for all buyers on their first purchase:

• 58%: Personal savings (+2 pts.)
• 8%: Gifts from parents or other family members (-3 pts.)
• 4%: Loan from parents or other family members (unchanged)
• 7%: Withdrawal from RRSP (-1 pt.)
• 2%: Other sources (-1 pt.)

Renewals

• 70% of mortgage holders expect to renew their mortgage within the next three years
  • 23% expect to renew this next year
  • 27% expect to renew within the next two years

Negotiation

• 44% of mortgage holders said they simply accepted the initial rate offered to them by their lender during their last renewal (+3 pts. from last year)
• Only 8% of respondents said they “significantly” negotiated their rate (-8 pts.)

Refinancing

• 69% of Canadians have not considered refinancing their mortgage (-6 pts. from last year)
• 5% have refinanced their mortgage in the past year
  • Canadians under the age of 34 have already refinanced twice as much as those aged 35-54
  • 52% of those who have refinanced their mortgage used the same broker who assisted with their purchase and 26% switched brokers
  • 67% remained with their same lender (-7 pts. from 2022) and 15% switched lenders. (-1 pt.)
• 9% of those who refinanced have paid a penalty (-1 pt.)
• $3,511 is the average penalty paid when refinancing a mortgage (down from $5,173 a year ago)

Equity Takeout

• Through refinancing
  • 16%: Percentage of homeowners who took equity out of their home in the past year through refinancing (+2 pts.)
  • $92,838: The average amount of equity taken out through refinancing (+$32,428 from 2022)
• Using a home equity line of credit (HELOC)
  • 9%: Percentage of homeowners who took equity out of their home in the past year via their HELOC (+1 pt.)
  • $37,495: The average amount borrowed from their HELOC (-$4,165 from 2022)

Most common uses for the funds include:

• 34%: For home renovation and repair (-2 pts. year-over-year)
• 33%: For debt consolidation and repayment (+1 pt.)
• 23%: For purchases (no change)
• 15%: For investments (-6 pts.)
• 8%: To gift or lend to family members (-1 pt.)

Actions to accelerate mortgage repayment

• 40% of mortgage holders took action to shorten their amortization periods (-5 pts.)
  • 16% made a lump-sum payment (-3 pts.)
    • The average lump-sum prepayment was $22,962 (+$1,460)
  • 15% increased the amount of their payment (-3 pts.)
    • The average voluntary monthly payment increase was $699 (+$88)

Use of mortgage professionals

Broker share

• 34% of mortgage borrowers used the services of a mortgage broker when they obtained their mortgage (+5 pts. year-over-year)
  • 46% of first-time buyers used a mortgage broker (+1 pt.)
  • 45% of those who purchased within the last two years (+5 pts.)
  • 40% of those in Ontario (+10 pts.)
  • 40% of those in Quebec (+6 pts.)
  • 38% of those aged 35-54 (+8 pts)
  • 37% of those aged 18-34 (+4 pts.)
• 54% of mortgage borrowers used the services of a bank (-6 pts.)

Mortgage professional outreach

• 1.9: The average number of mortgage professionals consumers consulted with when obtaining their current mortgage
• 2.3: The average number of quotes they received

Reasons why consumers hesitated to work with a broker

• 27% said they didn’t want to pay for a broker’s services (unveiling a knowledge gap about how mortgage brokers are compensated, which is typically through a commission paid by the lender)
• 17% said they didn’t think a broker could get them a better deal
• 13% said they didn’t understand how brokers are compensated
• 11% said they don’t trust brokers or the process of working with a broker

Broker customers report higher satisfaction compared to bank clients

• 38%: Ease of doing business
  • vs. 35% for bank clients
• 37%: Reliability
  • vs. 35% for bank clients
• 37%: frequency of contact during mortgage process
  • vs. 30% for bank clients
• 37%: Knowledge and understanding of mortgage products and rates
  • vs. 34% for bank clients
• 36%: Offering competitive mortgage rates
  • vs. 31% for bank clients
• 33%: Providing personalized service
  • vs. 27% for bank clients
• 27%: Level of contact post-transaction
  • vs. 27% for bank clients

affordability joe jacobs Lauren van den Berg mortgage consumer survey mortgage professionals canada mortgage statistics mpc MPC consumer report semi-annual state of the housing market survey statistics

Last modified: June 11, 2024