The Canada Mortgage and Housing Corporation (CMHC) released the results of its annual Mortgage Consumer Survey, announcing some not-so-shocking statistics about first-time buyers.
The survey was completed by 3,002 mortgage consumers that participated in a mortgage transaction between March 2016 and March 2017. “Relationships and referrals are a very important part of the mortgage lending industry,” says Nathalie Fredette, Vice-President, Client Relationship Management. “The survey findings can be used by mortgage professionals to manage their businesses by improving the overall customer experience.”
The majority of the respondents engaged in a mortgage renewal (65%), while 15% were refinancing, and 20% purchased a home. The segment we’re interested in for the sake of this post is the 11% of first-time buyers.
The one statistic that most media outlets are jumping on is the fact that 18% of first-time buyers received a financial gift from family to go towards their down payment. To us, this seems normal and expected.
What stood out to us was that 71% used their own savings. With the rental market getting less and less affordable, it’s surprising that any first-time buyers even have savings. CMHC also found that only 64% of first-time buyers were renting before purchasing; the other 34% were living with family.
The 18% who borrowed money from their family were less comfortable with their current level of debt, less likely to have other assets to supplement needs, and less confident in what they would do in the event of financial trouble.
A big question we have (and maybe we missed this in the results), is where did the other 11% of first-time buyers get the money for their down payment, if it wasn’t from savings or their family?
When it comes to the reasons for purchasing a home, the two most common among first-time buyers were “wanting to buy their first home” (37%) and “feeling financially ready” (31%). As for finding mortgage information, a whopping 42% of first-time buyers turned to social media.
Then when the time came to arrange their mortgage, only 57% went with the financial institution that they dealt with the most, making the first-time buyer segment the least loyal of the bunch.
Overall, we’re glad to see that many first-time buyers are able to save for their down payment on their own. Our communities are dependent on first-time buyers, because they are the future families that will support our economy.