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Six Consumer Choices in Mortgage Market

The 2020 report on the Annual State of the Residential Mortgage Market in Canada has just been released by Mortgage Professionals Canada (Link: and it gives an insight into the housing market as it stands currently. The report suggests that the attitudes and expectations of homeowners haven't undergone any drastic changes. Consumer choices in the mortgage market are also highlighted in the report. Here are six choices you must know about.

Mortgage Market Dimensions

For this report, the estimated households in Canada were derived from the figures of the most recent Canadian census conducted in 2016. An estimated 14.99 million households are there in Canada currently. Of these 10.01 million are owner-occupied housings in Canada and 6.08 million of these homeowners have mortgages. Of these 6.08 million people, 1.72 million are those who have Home Equity Lines of Credit and 4.36 million homeowners have a mortgage without Home Equity Lines of Credit.

Amortization Periods

A major chunk of homeowners has opted for amortization periods of 25 years or less. As per the new date, the amortization periods have been slightly lengthened over the course of time. From 2018 to 2021, the average amortization period is 21.5 years, which is slightly more than the 20.6 years for all purchase periods. For 10% of all the mortgage holders, the contracted amortization periods exceed 25 years.

Activities that Hasten Repayment

Homeowners were asked about actions that could lessen the number of years in which they would have to pay off the mortgage. From the three listed actions, 33% of the mortgage holders took these actions (one or more) to accelerate repayment. The data collected also indicated that the recent homebuyers i.e. those who purchased homes between 2018 and 2021 were also quite likely to take one or more of these actions towards accelerating repayment. 925,000 mortgage holders opted to voluntarily up their mortgage payments in the past year. $ 470 per month was the average sum increased per month, for a total of $ 5.2 billion each year as per estimated figures. $28 billion lump-sum payments were made with $ 7 billion paid by those who made a lump sum payment towards fully paying out the mortgages.

Burden of Indebtedness

The people of Canada are more indebted now. However, this growing indebtedness is matched by asset growth. The recent household debt to assets ratio (16.3%) is almost equal to the long-term average (16.7%).  In fact, the ratio has improved in the past decade by showing a slight fall.

Mortgage Arrears

Data taken from 10 major Canadian banks indicates that only a small percentage of mortgage holders have arrears. In November 2020, the arrears rate was at 0.22% which is quite low in historic terms. The reasons for arrears were mostly the inability to pay because of reduction in salaries, job losses, divorces, etc.

Mortgage Representatives

During the survey mortgage holders asked from whom did they get their mortgage on a primary residence. It was revealed that 55% of people got mortgages from banks while 31% got it from mortgage brokers, 9% from credit unions, and 4% from a life insurance or trusts, and 1% from other sources.

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