The Canada Mortgage and Housing Corporation (CMHC) released its annual 2024 Mortgage Consumer Survey on May 8, 2024. The survey had feedback from nearly 4,000 people in Canada who renewed or refinanced a mortgage, or bought a home over the past 18 months. It sheds light on the opinions and behaviours of Canadian mortgage consumers, and highlights ongoing concerns affecting them, such as affordability challenges and rising interest rates.

According to the survey, 15% of Canadians took out a mortgage during the survey period, which is comparable to the 16% who did during the 2023 survey. Of those, 62% were renewing, increasing from 58% in 2023, while 18% were homebuyers, decreasing from 23% in 2023. 19% were refinancing.

Over the 18-month period, interest rates rose significantly, influencing the decisions of potential homebuyers. 22% of home buyers purchased their home earlier than planned because of these rising rates, while 13% chose to delay their purchase. The numbers of those delaying were nearly three times higher than in 2023. First-time buyers and newcomers were most impacted, at 18% and 26%, respectively, choosing to postpone their purchases. There was a significant rise in the numbers affected by interest rates, from 50% in 2023 to 65% this year.

An average saving period of 4.2 years for a down payment was reported. 30% of buyers received financial assistance, indicating a strong trend of many home buyers needing help to break into a challenging market. Of the buyers who received a gift for the down payment, 32% reported they would not have been able to purchase a suitable home without this assistance. Canadians are also finding other ways to achieve ownership despite difficulties; 12% of respondents bought a property with a non-spousal family member or a roommate.

33% reported refinancing a mortgage to complete renovations or home improvements, while 23% refinanced for debt consolidation. 12% of refinancers added a supplementary suite, suggesting a growing trend towards enhancing property value and optimizing living spaces.

Despite economic uncertainties, 79% of mortgage consumers see home ownership as a sound long-term investment. Optimism about property values was also strong, with 65% anticipating an upswing in value over the next year, reflecting continuing confidence in real estate as a wealth-building asset; this was an increase over the 55% who were confident in 2023 that their properties would increase in value over a 12-month period.

For real estate investors and private mortgage lenders, the survey findings unveil crucial insights into market dynamics and consumer behaviour. The heightened sensitivity to interest rate fluctuations underscores the importance of closely monitoring economic indicators and adjusting investment strategies accordingly. Additionally, the growing emphasis on home improvement projects presents lucrative opportunities for investors to capitalize on the burgeoning demand for renovation financing solutions. Moreover, the prevalence of co-ownership arrangements signifies a shift towards innovative financing models, presenting new avenues for private mortgage investors to diversify their portfolios and cater to evolving consumer preferences.

An interesting trend is the increasing prominence of digital avenues when it comes to buying real estate. The majority of consumers research online before completing a mortgage transaction, and 52% completed the process completely online, up from 34% in 2023. This parallels the trend of buyers using online research for researching properties to buy, which could be as high as 97%, as well. It is clear that investors, lenders, and sellers need to enhance their digital presence to cater to this trend.

Mortgage Consumer Insights by Joanna Gerber | Canadian Real Estate Wealth