Changing affordability and maximum mortgages
Canadian home buyers are taking their mortgages to the max.
The latest Consumer Survey by Canada Mortgage and Housing Corporation suggests more than 65% of recent home buyers bought the maximum amount of house they could afford.
It may be a little surprising that number is not higher given the results of a recent, separate, survey on affordability by one of the big banks.
It shows the median home price shot up by $38,000 between the first and second quarter of this year. That is the widest margin in more than 25 years. Compared to Q2 of 2020, the median price is up by $89,000.
According to the report income growth and low interest rates had been helping to improve affordability over the past two years. But price increases have since outpaced wage growth and some interest rates have increased.
Prices being what they are the CMHC survey notes that just 27% of recent buyers paid more than they had planned to for their home, while 20% paid less than they expected.
Six in 10 buyers maxed-out their mortgages at less than $500,000 and 8% spent more than $1-million.
Mortgage brokers continue to play a significant role in the home buying process with 42% of purchasers using a broker. The vast majority of those people (85%) felt their broker saved them both time and money.
Five year, fixed rate mortgages remain the most popular.