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Canadians Get Comfortable with Variable Rate Mortgages in 2014

This time each year, the Canadian Association of Accredited Mortgage Professionals (CAAMP) releases their Annual State of the Residential Mortgage Market in Canada. Data in the report comes from various sources, including an online survey of more than 2,000 Canadians. Some of the statistics weren’t news to us – namely just how low mortgage rates are now compared to last year – but there’s one, in particular, we thought might be news to you.

Twenty per cent (20%) of new homeowners chose to get a variable rate mortgage in 2014; that’s up 11% from the 9% we saw in 2013. Correspondingly, the popularity of new fixed rate mortgages went down 6%, from 82% in 2013 to 76% in 2014. Why are more Canadians getting comfortable with variable rate mortgages? Perhaps after watching Prime rate sit at 3.00% for 4+ years, buyers are seeing there may not be as much “risk” to the variable rate as they once thought. Or it’s that 5-year variable rates can be found for as low as 2.10% (Prime – 0.90%).

Here are some of the other stats that stood out in this year’s report:


Canadians continue to see real estate as “a good long-term investment”. In fact, 10 million Canadians became homeowners in 2014 (from 9.52 million homeowners in 2013 to 9.62 million homeowners in 2014). And the average down payment was 21% of the purchase price of their homes! When asked why they bought homes this year, CAAMP found Canadians saw homes as 70% a place to live and 30% an investment. For that reason, it’s not surprising many felt mortgages were a “good debt” to take on and 91% reported being happy they became homeowners in 2014.

Mortgage Debt

While the total outstanding mortgage debt for all homes climbed from $1.19 trillion to $1.3 trillion, the number of Canadians who are now mortgage debt-free also went up. Today, 3.98 million homeowners have paid off their mortgages (up from 3.29 million last year); that’s 41% of all homeowners! Of the remaining 5.64 million homeowners who do have mortgages, those surveyed had decreased their contracted amortizations to 21.2 years (from 23.3 years in 2013), and, through accelerated payment methods, expected to be mortgage debt-free in just 17.5 years (from 18.2 years in 2013).

Mortgage Rates

We’ve seen the trends on our site, and there’s no doubt about it: mortgage rates dipped even lower this year. The average mortgage rate on all home purchases made in 2014 was just 2.89% – a 0.34% drop from the 3.23% we saw in 2013. Homeowners who renewed in 2014 also did so at a lower rate – an average of 3.12%, down from 3.20% in 2013. The average mortgage rate on all existing mortgages in Canada is 3.24%; that’s 0.26% less than last year (3.50%). The average 5-year fixed rate was 3.06%, which stayed the same.

Home Equity

Finally, let’s talk about home equity – how much we have, and how much we took out. The good news is that more than 85% of Canadian homeowners have 25%+ equity in their homes. The bad news is that 11% of homeowners (same number as last year) took equity out to pay for other things. In total, $63 billion of equity was taken out of our homes (avg. $55,000 per person). The money was used for: debt consolidation ($20.6 billion, up from $16.6 billion), home renovations ($17.4 billion), investments ($7.7 billion, down from $15.1 billion), purchases or education ($6.6 billion) and other things ($10.3 billion).

CAAMP is the national organization representing Canada’s mortgage industry. Established in 1994, CAAMP has taken a leadership role in Canada’s mortgage lending industry and has set the standard for best practices in the industry. CAAMP’s other primary role is that of consumer advocacy. On an ongoing basis, CAAMP aims to educate and inform the public about the mortgage industry. CAAMP has conducted semi-annual consumer surveys since the fall of 2005.