Genworth Financial Canada released a new mortgage-related survey on Tuesday.
Among other things, the study found that:
- 23% of mortgage holders have made a lump-sum pre-payment or accelerated their mortgage payments in the last 12 months.
The first thing we thought of when reading this was that it’s a wonder more people don’t take low-frills mortgages (those with 5-10% annual pre-payment privileges). Most people have the best intentions of making pre-payments, but relatively few actually do. As a result, many needlessly overpay for large pre-payment privileges in the form of higher mortgage rates.
- 22% of recent and intended home buyers say they got pre-approved in the last year.
This figure seems ultra low. Pre-approvals/Rate Holds are a no-risk option. They protect people against rising rates and, in some cases, establish qualification in advance of a home purchase. Interestingly, there have been other studies showing as many as 91% of first-time home buyers get pre-approved (See: More Buyers Get Pre-Approved).
- 49% of homeowners made down payments of 20% or more on their most recent home purchase.
This seems about right. Earlier this year, CMHC found that 42% of prospective home buyers planned for at least a 20% down payment. (See: New Facts On Home Buyers)
- 59% of Canadians claim to pay their credit cards in full each month.
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This data was collected between March 4-10, 2010 from 2,001 respondents by Environics Research Group on behalf of Genworth Financial Canada. CMT comments in italics. Here’s more…
Last modified: April 26, 2014
On preapproval – I think the trend has been other way now a days. A client gets pre-approved and then he/she askes for a better deal before closing. Many lenders do not like to do that – because of double work and also this would reduce the closing ratio. So, my guess is people got the feel that the interest rate is not going to go too high, and the quick closing deals are often the better deals. What do you think?
Sudip
It’s crazy that only 59% of Canadians claim to pay their credit cards in full each month. Does that mean roughly 41% carry consumer debt at any given point in time?
Yep, that is exactly what it means! That number of debt might be even higher.
On a completely unrelated note… You had me very excited that it was Friday today! Then I looked at the Calendar, and saw it is only the 22nd… ;)
Most of what you said is true but I agree with Rob that everyone should at least get a rate hold someplace if they are serious about buying. There is no reason to be unhedged and incur the risk of rates increasing.
I think it was wishful thinking on our part! :)
According to the June 2010 TD First Time Home Buyer’s survey:
91% first time home buyers got pre-approved mortgages vs 22% of all (not just first time) home buyers in Genworth survey
63% of first time home buyers will need CMHC, in other words 63% are expected to make less than 20% down payment… vs 51% for all home owners in the TD Survey & 58 % in the CMHC survey earlier…