A big factor leading up to the U.S. mortgage crisis was that 40% of American home purchases were being made for investment purposes. In Canada today, the figure is far more reasonable at 5%.
Despite the economic meltdown, Canadian mortgage arrears are still just .40%.
Last year, 18% of Canadians refinanced. They took out $41 billion of equity from their homes. In 2009, Dunning feels the figures should be similar.
41% of refinance proceeds were used to pay down debt. 29% was used for home renovations. 15% was used for investing.
According to Merix, the most important stats for mortgage brokers were these:
This year, only 1/3 of mortgage activity was new mortgages.
Over 2/3 of Canadian mortgage activity was renewals and refinances.
With the refinance phase coming to an end and new mortgage activity declining, Dunning said, brokers will need to be far more strategic in terms of marketing and prospecting.
Dunning also noted that borrowers generally remain with the same lender at renewal. That’s in keeping with a stat we wrote about earlier this year. According to CMHC, 90% of borrowers renewed with their existing lender: CMHC 2009 Mortgage Survey.
That’s a stat that makes repeat business a lot harder to come by.