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2015 CMHC Mortgage Consumer Survey

May 31, 2015 Robert McLister 20

CMHC consumer survey2015Around this time each year, CMHC releases its Mortgage Consumer Survey, a keenly insightful report for anyone in the mortgage business.

Its loaded with industry stats, including this year’s headline number: broker market share. CMHC now pegs broker share at 42% of mortgage originations among repeat buyers.

Among the coveted first-time buyer segment, brokers now own the lion’s share (55%) of the market. Last year it was 48%. Lenders who are not in the broker channel, take note of this trend.

But this isn’t all that’s eye catching. Per usual, we’ve combed through this year’s report and yanked out all the other good stuff. If you’re pressed for time, check out the “must-read” data that’s highlighted in red. (The comments in italics are ours.)



Online Information Gathering

78% of mortgage consumers turned to various online sources to discover mortgage options and features (unchanged from 2014).
Out of that 78%:
67% used an Internet search engine
23% said they found their lender website through online advertising
28% said they found their broker website through online advertising
(This can include search engine pay-per-click ads, online banner ads, rate comparison sites, etc.)
70% of mortgage consumers who went online used a mortgage calculator.
51% used a calculator from a lender website
16% used a calculator from a broker website
Of those using an online mortgage calculator:
62% used one to determine mortgage payments
33% used one to compare mortgages
34% used one to gauge mortgage affordability
17% of mortgage consumers reported using a mobile device.
22% of those used a mortgage-related app
(As reported last week, comScore found that 88% of a typical smartphone user’s time is spent using apps. Apps are clearly used much less for mortgage shopping than for other things.)


Broker Share and use

Broker share continues its upward trend:

42% of mortgage originations among repeat buyers are handled by mortgage brokers.
Versus 32% in 2012
(Among other things, industry advertising initiatives, the media and the internet rate ads may be playing key roles here.)
55% of mortgage originations among first-time buyers are handled by mortgage brokers.
Versus 48% in 2012 and 2014
21% of those renewing used the services of a mortgage broker.
Versus 23% in 2014
(This number has still been uptrending over the long term. In 2010 it was 13%.)
79% of recent buyers said they were satisfied with their experience using a broker.
72% said they would likely use their broker again in the future.
73% said they would likely recommend their broker to family or friends.
17% of clients reported changing brokers during the mortgage process.
35% of those said they changed in order to get a better rate
(This was the number one reason for the switching.)


Lender Loyalty and Channel

42% of recent homebuyers used a mobile mortgage specialist to arrange their current mortgage.
79% of recent homebuyers said they were satisfied with their lender experience (same as with brokers).
76% said they would likely use their lender again in the future.
69% said they would likely recommend their lender to family or friends.
Lender satisfaction among recent buyers, by channel:

84%: were satisfied with their mortgage specialist.
77%: were satisfied with their branch rep.
Most mortgage consumers remained loyal to their existing lender:

86% of renewers remained loyal to their existing lender.
77% of repeat buyers remained loyal to their existing lender.
Versus 67% in 2014
47% of first-time buyers arranged their mortgage with their primary financial institution.
Versus 54% in 2014
Of those who switched lenders:

60% used the services of a mortgage broker.
(Same as last year.)
63% cited interest rate as their primary reason.
Versus 40% in 2014
(This is a major change in just 12 months, which makes us a bit skeptical. Consumer education, falling rates and the growing prevalence of rate comparison tools may partly contribute to this surge.)


Product offering from mortgage professionals

72% of broker clients reported being offered mortgage life insurance.
78% of lender clients reported being offered mortgage life insurance.
(What this doesn’t tell you is that lender pe*******on rates are notably greater than brokers’ for creditor life products. Mind you, we’re unaware of good data on this phenomenon. It’s more of an anecdotal observation based on lender and supplier reports.)
48% of broker clients reported being offered a line of credit.
66% of lender clients reported being offered a line of credit.


Renewal Process

71% of renewers reported they were notified in advance by their lender that their renewal date was approaching.
67% of those were notified within three months of their scheduled renewal
23% indicated they were contacted in advance by a mortgage broker regarding their upcoming renewal.
60% renewed before their scheduled date.
(Lenders love to lock up clients early—to keep them from shopping around.)
61% reported they were “totally satisfied” with their decision to renew in advance of their actual renewal date.
55% said their main reason for renewing in advance was to avoid a perceived increase in rates.
19% indicated that the main reason for renewing early was because their mortgage professional convinced them that it was the right decision.
49% of renewers have their mortgage payment set higher than the minimum required payment.
Advising renewal/refi clients to keep mortgage payments at the same level (to reduce their amortization) can lead to a:

66% increase in likelihood of using the same mortgage professional again.
55% increase in client satisfaction.


Customer follow-up

50% of mortgage consumers who used a broker were contacted by their mortgage professional following their mortgage transaction.
Versus 51% in 2014
34% who used a lender were contacted.
Versus 35% in 2014
40% of mortgage consumers “totally agreed” that their post-transaction contact was useful.
(Are people getting tired of home improvement and gardening tips from their mortgage advisor?)
Types of follow-up contact mortgage consumers would have considered useful:

Advice on long-term mortgage financial strategies.
25% of lender clients
32% of broker clients
Housing market information.
13% of lender clients
21% of broker clients
Information on how to manage financial difficulty.
14% of lender clients
17% of broker clients
Investment opportunities.
14% of lender clients
17% of broker clients


And perhaps the number-one stat that should leave an impression on any aspiring (or seasoned) broker:

Post-transaction contact with clients can increase the likelihood for repeat business by nearly 53%.


Survey background: CMHC’s survey was conducted online and polled 3,510 recent mortgage consumers who had undertaken a mortgage transaction in the preceding 12 months. CMHC has conducted this survey since 1999.

05/25/2015

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/what-1-million-buys-you-in-one-hot-toronto-neighbourhood/article24044731/

What

05/25/2015

http://business.financialpost.com/personal-finance/mortgages-real-estate/toronto-home-sales-soar-to-fresh-record-in-real-estates-hottest-month-of-year

Toronto home sales rose 17% and prices climbed 10% in April, and if new listings continue to fall behind, prices will just keep climbing, say realtors

05/25/2015

Invest In Real Estate
Land is a finite resource, but Canada’s population is increasing. The basic laws of supply and demand mean that land, in general, will become more valuable in the future.
Real estate investment has also kicked into high gear recently as low mortgage rates inspire many to buy additional investment properties.
Although attractive, real estate investment is complicated. Here are several different approaches to entering the world of real estate investment:
1. House Flipping
Many people first become involved in the real estate market through house-flipping. This is when you buy a house when the market is low, renovating it, and selling it when the market is high again.
An advantage of this approach is the ability to live in a house while waiting for its value to mature. This option carries one major risk: the cost of renovations might exceed the profit on the house. Make sure you understand what kinds of repairs will be needed before buying a house to flip.
2. Rental Properties
Buying property to rent has a lesser level of risk. As long as the rent can cover your mortgage interest, taxes, and maintenance, you will not lose money by holding a rental property. All you have to do is continue to pay down the principal and wait for a good time to sell.
Although these benefits are tempting, rental properties are hampered by tighter mortgage restrictions. To purchase a rental property on mortgage, you will need to provide at least 20% of the value as a down payment. Another disadvantage is a continuing time commitment of finding tenants, collecting rent, and arranging for maintenance.
3. Commercial Mortgages
For a less demanding rental property, consider using a commercial mortgage to buy storefront or office space.
This has all the high benefits and low risks of rental property, with (usually) much less work. Commercial mortgages, unfortunately, require more stringent appraisals, including environmental assessments. All these appraisals can cost a lot of fees and take a lot of work.
The typical value of a commercial mortgage, often over a million dollars, can also dissuade potential buyers.
4. Real Estate Investment Trusts
Real Estate Investment Trusts (REITS) are a solution for those who want to invest in real estate, but lack the capital to use as a down payment on large properties.
A REIT is run as a corporation that collectively acquires and sells property. REITs typically pay out over 90% of their rental profits directly to investors, making them far more profitable than most investment groups.
If you want to know what your options are for investing in real estate, contact us today and find out what we can do for you!