First-time buyers still entering housing market
First-time buyers still entering housing market – Mortgages considered ‘good debt’
Low interest rates and favourable economic circumstances are keeping substantial numbers of first-time home buyers entering the Canadian housing market.
They feel confident in weathering a downturn in the market and consider mortgage debt to be “good debt,” according to a consumer survey by the Canadian Association of Accredited Mortgage Professionals (CAAMP).
The report looks at Canadians’ attitudes about their purchase decisions and found that homeowners appear to be “happy with the decision to buy their home.” Their attitudes are the same whether they live in Toronto, Calgary or Vancouver, where prices continue to rise, or in areas where home prices are stabilizing.
Fifty-five per cent of homes purchased in 2013 were bought by first-time buyers;
Most Canadians say they have no regrets taking on the size of mortgage they did and that real estate is a good long-term investment;
Sixty-six per cent agree to some degree that mortgages are a form of “good debt”;
House prices in Toronto, Calgary and Vancouver have increased by a year-overyear rate of 8.2 per cent, compared to just 2.9 per cent in the rest of Canada;
By next year, housing starts will have fallen by 20 per cent compared to levels in 2011 and 2012;
More than 80 per cent of homeowners in Canada have 25 per cent or more equity in their homes
The average mortgage interest rate is 3.24 per cent, a drop from the average of 3.5 per cent found in the fall 2013 survey.
“Key to the current stability in the mortgage market is the fact that Canadians continue to pay down their mortgage debt faster than they are required and they continue to take out five-year, fixed-rate mortgages,” said Jim Murphy, president and CEO of CAAMP, in a news release. “Canadians who renew their mortgages are seeing their interest costs reduced, which is boosting their personal financial circumstances, and this will continue to be a positive force during the coming year.”
But the market is slowing in most of the country.
“While the national market may look healthy, activity in the Greater Toronto Area (including Hamilton), the Greater Vancouver Regional District and the Calgary area is skewing the numbers high,” said Will Dunning, CAAMP chief economist. “In the rest of Canada sales activity has weakened and house prices are flat, and even falling in some communities.
“Housing has played a key role in driving economic growth and job creation in Canada. But looking ahead, decreased starts and slower price growth will throw off the balance between the housing market and the overall economy.”
Source: Mortgage Broker News / The Star Phoenix