Despite the prospect of higher interest rates ahead, nearly three-quarters of mortgage holders say they could handle a rise in monthly payments of more than 10%.

This is just one of many new insights included in Mortgage Professionals Canada’s latest State of the Housing Market report, which provides a current snapshot of mortgage consumer attitudes, expectations and home-buying behaviour.

While a majority of borrowers generally seem well-positioned to handle higher rates, some are already struggling with their payments, and more would depending on the size of the payment increase.

About 6% of mortgage-holders say they are currently struggling to make their payments and an additional 23% would have difficulty if their payments increased 10% or less.

The recent run-up in house prices, along with rising rates, are impacting Canadians’ views towards homebuying. The survey found less than a third of Canadians (29%) think now is a good time to buy a home in their community—the lowest share recorded in the survey’s history.

Having said that, 90% of current homeowners say they are happy with their decision to buy a home.

And with recent headlines about investors making up a growing share of recent home purchases, the survey asked homeowners to assign a weighting to how much of their home is a place to live vs. an investment. On average, respondents assigned a 77% weighting of their home as a place to live (up two points from 2020), while they consider 23% an investment (down two points).

“Canadian homes are therefore generally purchased for suitability first, with investment return a secondary consideration,” the report noted.

Mortgage broker clients reported higher satisfaction

The survey found Canada’s broker channel market share holding steady at around 30%, with a higher share among first-time buyers (37%).

Satisfaction with the homebuying process was also higher among mortgage broker clients.

A large majority (85%) said they were satisfied with the services they received from their broker compared to 78% of bank clients. Broker clients (51%) were also more likely to be “very satisfied” with the competitiveness of their mortgage rate compared to bank clients (37%).

“Mortgage brokers’ excellent satisfaction scores are unsurprising when considering the variety and versatility of lenders they represent, and their ability to assist Canadians with different incomes and employment structures,” Mortgage Professionals Canada President and CEO Paul Taylor told CMT.

“Understanding the products and offerings of multiple lenders means mortgage brokers will generally always have access to the most appropriate and cost-effective product for any borrower’s needs and lifestyle,” he added.

For a deeper dive into the results, we’ve extracted the most relevant findings by category below…

Interest rates

• 66%: The percentage of mortgage holders that currently have a fixed mortgage rate
  • 74% of these borrowers have always had a fixed rate
  • 15% locked in from a variable rate more than 12 months ago
  • 8% locked in from a variable rate within the past 12 months
• 26%: The percentage of borrowers with a variable-rate mortgage
  • This is up from 21% in last year’s survey
  • 45% of these borrowers have always had a variable-rate mortgage
  • 33% switched from a fixed rate more than 12 months ago
  • 20% switched from a fixed rate within the past 12 months
• 4% reported having a “hybrid” mortgage, which is part-fixed and part-variable
• 64% of respondents expect interest rates to rise (up from 52% in 2020)
  • 22% expect interest rates to rise “dramatically” (up from 7% in 2020)

Home prices

• $647,036: The average purchase price for a home bought within the last two years
  • This is up 20.5% from the average purchase price of $536,822 reported in last year’s survey
• $500,491: The average purchase price among first-time buyers
  • Up from $476,500 in 2020
• 56% of respondents expect house prices in their community to continue to rise, while 26% expect prices to increase “dramatically”
  • Four years ago, just 10% of respondents expected prices to rise dramatically

Down payments

• 24%: The average size of the down payment made by first-time buyers in the past two years in relation to the purchase price, or an average down payment amount of $120,545
• 46%: The average down payment size among all buyer types, or an average of $297,476
  • This is up from 30% in 2020