How Do Consumers Feel About the Market?

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Economists and mortgage experts are always quick to analyze the Canadian housing market. However, these industry leaders often forget to ask for consumer opinions and insights. Luckily, there’s the CMHC Annual Mortgage Consumer Survey to help fill this gap.

Conducting in February and March of 2012, the CMHC Mortgage Consumer Report surveyed 3,502 recent mortgage consumers in order to better understand how market conditions are impacting the average buyer. Findings from the report are extremely useful, not just for first time home buyers and competitive mortgage rate seekers, but also for mortgage brokers and lenders. Here’s a look at some of the top statistics.

Online Engagement

Not surprisingly, more and more people are researching their mortgages online. Overall, about seven in ten (71 percent) of consumers reported using online sources in 2012, up from 65 percent in 2011. What’s more, approximately one in three (31 percent) relied solely on the Internet to gather information about mortgage rates and lending options.

Interest rates were the main topic of conversation online, as nearly 86 percent of mortgage consumers reported researching rates online. Other popular items included mortgage calculators and general information on mortgage products. In most cases, consumers found online resources to be helpful, awarding a usefulness rating above 80 percent.

Facebook is becoming an increasingly useful tool for mortgage seekers. Among first time buyers, roughly 12 percent said they looked to this medium for mortgage-related news and information. The interesting thing to note here is that 43 percent of social media users turned to their online network in order to solicit opinions or to provide answers to other mortgage consumers.

Mortgage Brokers are a Useful Resource

Recent buyers continue to rely on mortgage professionals (mostly lenders and brokers) for advice during the mortgage process. What’s more, 45 percent of buyers who used a broker indicated that the broker was the single most influential person in their mortgage decision. More and more buyers are also listening to their peers, friends and family members when it comes to finding a mortgage professional. Roughly 25 percent of buyers reported receiving a specific recommendation to use a specific mortgage broker.

Buyers are becoming more and more informed each year, and they’re relying on their broker to provide them with the information they seek. In the past year, buyers received explanations on a range of topics, including:

  • The differences among various mortgage products (71 percent)
  • The purpose of mortgage loan insurance (67 percent)
  • Penalty clauses (67 percent)
  • Closing costs (62 percent)
  • Purpose of a mortgage pre-approval (62 percent)
  • Impact of mortgage prepayments and the effect of rising interest rates (61 percent)

The Importance of Follow-Up

Mortgage consumers highly valued their broker contacting them following the mortgage process. About two-thirds of customers contacted “totally agreed” that they were satisfied with the services provided by their mortgage professional. It’s worth noting this compares to only about four in ten among those who had not been contacted.

Mortgage brokers could still do more, however. Consumers reported that just 55 percent of brokers engaged in post transaction contact. The most common method of follow-up was via telephone, followed by email. For most part, the follow-up was simply to thank the customer and/or to confirm closing.

Understanding First Time Buyers

The 2012 CMHC Consumer Mortgage Survey showed that first time buyers have some distinct characteristics and needs from mortgage professionals. This demographic reported a higher incidence of using a mortgage broker, lower levels of lender loyalty, and greater influence from family members. First time home buyers also admitted to a higher incidence of starting their mortgage research with a family member and friend.

It’s also important to note that first time home buyers spend more time researching mortgage rates and products, they exhibit a higher incident of mobile device use, and they rely heavily on social media. Not surprisingly, first time home buyers spend an average of eight weeks prior to making their final mortgage decision, while the average mortgage consumer spends just five.

About the Survey

The CMHC Mortgage Consumer Report was conducted online and polled 3,502 recent mortgage consumers who were considered prime decision makers. The survey was limited to those who had a mortgage transaction in the preceding 12 months. Readers can view the entire survey online on the Canada Mortgage and Housing Corporation website.

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