Loan payments are OK, but Canadians overpaid for their homes

The pandemic hasn't led to a large-scale rise in defaults although younger homeowners are more likely to be struggling

Loan payments are OK, but Canadians overpaid for their homes
Steve Randall

Home has taken on a new level of importance in the last 18 months as many of us were forced to spend most of our time there.

Canadians have prioritized keeping a roof over their heads and maintaining mortgage payments according to a new report from the Canada Mortgage and Housing Corporation (CMHC), with most not struggling to do so.

The report says that 85% of homeowners surveyed said they had no difficulty in maintaining their mortgage payments during the pandemic, although younger respondents were more likely to have faced challenges in making payments.

Although more than two thirds of respondents thought that mortgage deferral programs are a good way to help homeowners, only 13% said they had used them.

Most respondents said that homeownership is a good long-term financial investment and are confident that they will be able to meet future mortgage payments. Three quarters expect their home to increase in value in the coming 12 months.

If they did have trouble meeting mortgage payments, 69% of respondents said they sufficient assets to supplement their needs.

Housing affordability

Affordability is never missing from a survey on the Canadian housing market, especially in these times of surging home prices.

CMHC’s 2021 Mortgage Consumer Survey found that 60% of respondents who had bought a home believe they overpaid with almost one third experiencing bidding wars. Two thirds said they had paid the maximum they could afford for their new home.

First-time homebuyers indicated that they purchased a home because, they see it as a safe and secure investment, it provides greater stability, and interest rates are low.

Asked about financing their new home, 55% did not use a mortgage broker with most of these opting to deal direct with their bank or other financial institution.