Canadians Are Committed To Paying Down Their Mortgages Quickly

Dated: February 13 2019

Views: 48

Canadians Are Committed To Paying Down Their Mortgages Quickly

Canadian mortgages
Photo by rawpixel on Unsplash.

Rising household debt is a major concern in Canada.

According to the Canada Mortgage and Housing Corporation (CMHC), the debt to disposable income ratio in Toronto and Vancouver exceeds 200 per cent. And 70 per cent of the debt in both cities comes in the form of a mortgage.

With high mortgage debt and rising interest rates across the country, it’s no surprise economists are concerned about the vulnerability of indebted households.

READ: TREB Calls On Ottawa To Rethink Mortgage Stress Test

Fortunately, a recent report from Mortgage Professionals Canada suggests Canadians are fighting back against mortgage debt.

“Canadians are highly motivated to repay their mortgages as quickly as possible,” Will Dunning, chief economist of Mortgage Professionals Canada told the Sun. “The surveys find consistently that each year about one-third of mortgage holders take actions that will shorten their amortization periods (such as) making lump sum payments, increasing their regular payment to more than is required, or increasing the frequency of payments. Among the most recent buyers, 28 per cent have made these additional efforts.”

READ: Canadian Mortgage Growth Will Be Low This Year, CIBC CEO Says

Dunning adds that the rate of mortgage arrears in Canada is very low. As of September, Canadian mortgage arrears fell to 0.24 per cent.

“The most important and difficult cause of mortgage arrears is a reduction of income, most often due to job loss. Arrears that are caused by higher interest rates are much easier to fix, for example, by adjusting the required payment through an amendment of the amortization period.”

READ: This Common Mistake Could Mean More Mortgage Payments

The good news is that Canadians are big fans of fixed-rate mortgages, which have already seen discounts in 2019. 68 per cent of homes bought in 2018 have a fixed-rate mortgage. Almost 90 per cent of the mortgages taken out last year has an amortization period of 25 years or less.

Blog author image

Steven Axford

Steve Axford grew up in Victoria, BC and has always been active in his community. Steve is a Victoria Cougars Hockey Team alumni as well as a Victoria Shamrocks (intermediate) alumni. During his time....

Latest Blog Posts

Choosing Flooring: 6 Things You Need to Know

When it comes to choosing new flooring for your home or apartment, the options can be overwhelming. Almost every type of flooring has some sort of advantage over other kinds, and taking in all the

Read More

Consumer interest in homeownership in Victoria unwavering over course of pandemic

A total of 989 properties sold in the Victoria Real Estate Board region this September, 60.6 per cent more than the 616 properties sold in September 2019 and 1 per cent more than the previous month

Read More

Understanding Canada’s Record Home Sales Last Month, And Why It’s Likely To Continue

Canada’s late Spring real estate market continues, but some of the pent-up demand has caught up. Canadian Real Estate Association (CREA) data show a new all-time record for August

Read More

Victoria real estate market experiences an active summer

A total of 979 properties sold in the Victoria Real Estate Board region this August, 48.1 per cent more than the 661 properties sold in August 2019 and exactly the same total as the previous month

Read More