Current Mortgage Issues
After abundant news coverage regarding the recent trends in the real estate and mortgage markets, it is natural to have questions. The Canadian Association of Accredited Mortgage Professionals (CAAMP) is an organization that educates and informs professionals and consumers in the mortgage industry. CAAMP recently released the following statement to more clearly illustrate the current state of the Canadian mortgage market.
Current Mortgage Issues
What Recent Data Illustrates
-Recent Statistics Canada data shows Canadians are listening to the message of Minister Flaherty and Bank of Canada Governor Mark Carney: Overall household income to debt levels declined in the most recent quarter. Canadians are acting responsibly;
-The Canadian Real Estate Association in its most recent report highlights a balanced market overall for listings and sales;
-CAAMP's February 2012 report entitled "Employment Impacts of Housing and Mortgage Activity" shows that between 2006 and 2011, 18% of all job creation occurred as a result of the housing and mortgage sector. At a time of concern over employment levels, we must not adversely affect this economic engine.
What Other Data Illustrates
-The rate of mortgage credit growth is slowing;
-CAAMP research shows the vast majority of Canadian mortgage holders can accomodate rate increases (84% can handle a $200/month increase);
-36% of Canadian mortgage borrowers are increasing their payments, making lump sum payments or increasing the frequency of their mortgage payments.
What We Must Be Mindful Of
-Instituting mortgage insurance rule changes that may precipitate a housing downturn the federal government wants to avoid;
-Even some advocating changes to mortgage insurance rules state "We need to be careful that changes in regulation don't trigger the unwind we fear ... " CAAMP could not agree more, we must be mindful of unintended consequences;
-Maintaining choice for Canadian borrowers so that we do not end up in a situation where the number of lenders is reduced;
-Basing mortgage / housing policy on one local market that adversely affects the country.
What We Should Do
-Continue to monitor the housing market and take action when data requires it;
-Maintain current system which is working. Previous changes to mortgage insurance rules are having an impact. Refinancing is down 40%;
-Make sure any changes are balanced and targeted to those segments of the market where there may be concern, based on data;
-Responsible borrowing is only effective with responsible lending. The most recent data shows Canadians are acting responsibly, so should lenders.
For more information, visit the website for the Canadian Association of Accredited Mortgage Professionals.