The Canadian Association of Accredited Mortgage Professionals, better known as CAAMP, has released new data on a recent research outlining that Canadian home owners and lenders are both very cautious with mortgages.
The new research data released January 14, 2010 gathered information throughout 2009 on approximately 40,000 mortgages. The data represents about 1/6th residential mortgages signed in Canada for 2009. That’s about $10 billion in funding.
Some important points regarding how home owners and lenders are managing their mortgages:
- People are borrowing less than they can afford. This means their GDS (Gross Debt Service) are well below the maximum limit of 32%. GDS represents any payments associated with housing. This includes mortgage payments, heating, condo fees, property taxes, etc.
- Approximately 70% of the mortgages issued in 2009 were at a five year fixed rate or more
- Fixed rate mortgages are still popular – approximately 86% chose fixed rate mortgages last year. However, with the variable rates being so low – this value is lower than in the previous year. Fixed rate variables are recommended for individuals that do not have a lot of ‘wiggle’ room with their money. They may be paying around 4% interest (compared to the variable 2.25%) but there is a sense of stability with fixed rate mortgages
The data revealed that only a small percentage of people were walking a thin line with their mortgages, meaning most Canadians are being smart and careful when obtaining mortgages. Both brokers and borrowers alike are understanding the risks involved with taking on too much debt.
This is good news to hear, especially after fears of a housing bubble surfacing in late 2009. When interest rates do begin to rise, CAAMP believes that the risks involved will be easy to control in comparison to what initially was expected.
A copy of the report can be found on CAAMP’s website at http://www.caamp.org/press-releases.php?pid=31&article=478 , appropriately titled “Revisiting the Mortgage Market – risk is small and contained”.
Parmida Modiri, AMP
Mortgage Agent
Lic. #: M08005765
www.signaturemortgage.ca
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