Mortgage market faces fewer risks
than in U.S.
Risks to the Canadian residential mortgage market are much l ower t han in the United States, says a national report released Wednesday by the Canadian Association of Accredited Mortgage Professionals.

Based on current housing market forecasts, the outstanding volume of residential mortgage credit is forecast to expand by close to $70 billion in both 2009 and 2010, growing at a rate of 7.6 per cent this year and seven per cent in 2010, said the report.

The growth rate has decreased from 10.4 per cent in 2008.

“It’s never been better to actually have a mortgage or to refinance or to get a mortgage. Rates are at all-time lows and likely to go lower,” said Jim Murphy, president and CEO of the association.

The report, by association chief economist Will Dunning, said mortgage credit is expected to surpass $1 trillion about mid-2010. The volume of annual approvals may fall to about $150 billion this year and $160 billion in 2010, down from totals that exceeded $200 billion per year in 2007 and 2008.

The report said about 9.1 million homes are owned in Canada. The estimated value of these homes is $2.67 trillion and the total outstanding mortgage principal on these homes is estimated at $739 billion.
This means Canadian homeowners have about $1.93 trillion in home equity, which amounts to 72.3 per cent of the total value of their homes, said the report, adding that the average equity holding in the United States is 43 per cent.

During the past year, 15 per cent of mortgage holders took equity out of their homes, representing a national total of $34 billion. Over half (57 per cent) used these funds for debt repayment or consolidation amounting to $12.5 billion.

Over 40 per cent of all Canadian mortgage holders have at least 50 per cent of the value of their homes in equity, and of all Canadian homeowners, which includes those without mortgages, 65 per cent hold at least half the value of their properties. Only two per cent of mortgage holders have negative home equity, meaning the value of the mortgage exceeds the value of the home.

“While many Canadians are experiencing mortgage-related challenges, these issues are much less significant than the problems in the American market,” said Dunning. “We are not seeing the dramatic mortgage rate resets or panic selling that occurred in the United States, and Canadian mortgage lenders and insurers are demonstrating a willingness to work with those who encounter financial difficulties. These are good signs for the health of the market.”

A survey done for the report also showed that residents in provinces experiencing the greatest impact from the economic downturn are surprisingly the most positive about the housing market.


Sixty-three per cent of Ontarians, 62 per cent of Albertans and 64 per cent of British Columbians believe that now is a good time to purchase a home.