On June 11, 2024, Mortgage Professionals Canada (MPC) released the results of their Semi-Annual State of the Housing Market Report. This survey highlights growing anxiety among mortgage consumers, especially about the financial implications of renewing mortgages at potentially higher interest rates.
Increasing Financial Anxiety Among Canadians
Based on responses from over 2,000 Canadians, the survey showed an increase in financial anxiety among homeowners. Notably, 76% of those due for mortgage renewal within the next 12 months indicated they are anxious about it, up from 66% the previous year. Furthermore, 70% of Canadians report feeling anxious about their family’s financial outlook over the coming months, a jump from 53% last year.
Mortgage Management and Comfort
Regarding Canadians’ comfort levels with their mortgages, 55% feel prepared to handle an increase in mortgage rates, a slight decrease from last year’s 60%. 33% regret the size of their mortgage, an increase from 26% in 2022. Among those renewing soon, 43% wish they had taken a smaller mortgage. 23% believe even a minor rate increase would impact their ability to make payments, while 9% are already currently struggling with their payments, up from 6% last year.
Maintained Positivity Toward Real Estate
Despite the financial pressures, Canadians continue to view real estate positively:
80% of respondents still see real estate as a sound long-term investment, a seven-point increase from last year, and 77% consider a mortgage to be “good debt,” up from 68% in 2023.
52% are optimistic about Canada’s economic prospects in the next year, an increase from 44%.
This positivity aligns with other surveys, such as the Canada Mortgage and Housing Corporation 2024 Mortgage Consumer Survey and an RBC one, although exact percentage findings varied.
However, non-owners are less optimistic. 51% now believe they will never buy a home, a significant jump from 18% two years ago. Only 16% of non-owners plan to purchase a home in the next 24 months, down from 23% last year.
Use of Brokers Rising
As Canadians navigate these financial challenges, many are increasingly turning to mortgage brokers. 34% of recent homebuyers used a mortgage broker, a rise of four points from last year. This trend is even more pronounced among first-time buyers (46%), and those who purchased in the past two years (45%). Even more (62%) of respondents are somewhat or very likely to use a mortgage broker in the future.
Related to this is the reported high satisfaction rates among broker customers, who appreciate brokers for their ease of business (38%), reliability (37%), and expertise in mortgage products and rates (37%).
Declining Negotiation at Renewal
Interestingly, while more Canadians are turning to mortgage brokers as an alternative, an increasing number are also choosing not to negotiate their mortgage rates at renewal. Only 8% report negotiating their rate significantly, down from 16% in 2021. Meanwhile, 44% accepted the initial rate offered by their lender, up from 37% two years ago.
There appears to be a lack of awareness about broker compensation, which typically comes from a lender-paid commission. Among those who expressed concerns about using a broker, 27% mistakenly believe they would have to pay for these services directly.
Concerns About Mortgage Fraud
Mortgage fraud remains a concern for Canadians, with 29% expressing worries about issues like document falsification and title fraud. 73% of respondents support income verification through the Canada Revenue Agency as a fraud prevention measure.
