Over the 2010-2012 period, a huge part of mortgage origination came from home patrons trying to refinance their current mortgages to profit from record-low rates and as well as from government-led initiatives. While the refinancing channel seriously drying up over subsequent months with very few mortgage eligible for refinancing still remaining, rates began rising towards the end of Q2 2013 because of which refinancing the mortgages no longer remained a profitable option for homeowners.
With the era of “easy refinances” in the past, lenders have started working to increase their purchase-mortgage origination. For example, in Canada, three out of five homeowners are saddled with mortgages. Historically, Canadians have been very practical borrowers, and the best indication of this is the mortgage-in-arrears statistics in Canada, which track the number of households that have not made mortgage payments in three or more months.
Statistics Canada found out that a significantly larger percentage of renters are overextended than homeowners in this country. That's one of the more noteworthy findings in its National Household Survey (NHS) data released this week. See mortgage rates in Canada online for detailed information.
The Canadian mortgage market has changed substantially in the past 20 years: trust companies have been taken over by banks; small virtual banks have offered new mortgage products; and brokers now play an important role in matching borrowers and lenders. But in many ways it’s harder being a renter.
The government has changed mortgage requirements several times over the last few years which affect how people may qualify for government-backed insured mortgages. As the regulatory environment changes, banks in Canada continue to offer very competitive mortgage products and services to millions of Canadians.
Less than half of one per cent of all mortgage holders with the country's largest banks are in arrears. This number has been stable for more than two decades, in times of high and low unemployment, high and low interest rates, and a strong or weak Canadian dollar. The findings of the research conducted by The Bank of
Canada recently are consistent with a model where consumers have different preferences and skills when shopping and bargaining for a mortgage and where lenders maximize profits based on observing these preferences and skills. The results indicate that high-income borrowers pay more for their mortgages, as do loyal consumers, consumers who search less, and those that value large branch networks. However, the unobserved bargaining ability still appears to play an important role in determining mortgage rates.