Nationwide mortgage survey also finds only half of buyers aware of recent “stress test” changes
First-time home buyers across Canada continue to be helped by the Bank of Mom and Dad, with nearly one in five (18%) respondents to a national survey saying they had help from family to raise their down payment.
Just over 70% of first-time buyers turned to their own savings for a down payment on their home, according to the Canada Mortgage and Housing Corporation (CMHC) poll of 3,002 mortgage consumers, released June 6.
The survey found that first-time buyers who took help from family tended to be less confident than other respondents with their levels of debt, as well as less confident they knew where to go in financial difficulty and less likely to find the mortgage process straightforward.
Concern about the process was not limited to first-time buyers, however. The poll found that 40% of all home buyers felt concerns or uncertainty. Of that group, 57% were primarily concerned with unforeseen costs, followed by fears of paying too much for a home and living with post-buying costs, both at 51%.
CMHC also questioned home buyers about their level of familiarity with the latest mortgage rule changes, which require all buyers with a down payment of less than 20% to qualify at a higher interest rate than they will pay.
Only 53% of buyers were aware of the new “stress test” – and of those, only 19% found that it impacted their home-buying decision by increasing their down payment, buying a smaller home or one in a different location, or delaying their purchase.
Use of Technology and Professionals
The survey also studied the rise in the use of technology to arrange a mortgage, with 76% of mortgage consumers doing their mortgage research online, and almost half reporting that they would feel comfortable using more technology to arrange their next mortgage transaction.
Four in ten mortgage consumers said they would be comfortable arranging their entire mortgage transaction using secure online tools and apps, without having to meet their mortgage professional in person. Still, most mortgage consumers said that it is still important to meet face to face with their mortgage professional when negotiating (69%) and finalizing (70%) their mortgage.
Canadian Mortgage and Housing Corporation
In terms of turning to others for advice their home-buying process, real estate agents remained the top go-to person, with 72% of buyers using one in their home purchase. This was followed jointly by mortgage lenders and family members, both at 57% – with only 41% using a mortgage broker.
However, CMHC found that those who use a mortgage broker sought a much higher level of advice than those who went directly to a lender, with 53% of broker clients seeking the best interest rates (vs 24% of lender clients), 46% assessing different types of mortgages (vs 25%) and 45% asking advice on financial strategies (vs 26%).
To read the full survey and infographic, click here.