Friday, June 24, 2011

CMHC Would Like You to Feel Good about Canadians' Increasing Debt Load

2011 Mortgage Consumer Survey

Buyers continue to view homeownership as an investment and take time planning their purchase
We're already in trouble. It's shelter, baby. No consumer investment should be highly leveraged, illiquid and require a 7% transaction fee.

Three-quarters of recent buyers feel it is very important to pay off their mortgage as soon as possible. In fact, 39% of recent buyers have their mortgage payment set higher than the minimum required.
I love the defensive tone here. *IN FACT* . . .

25% are sanguine about perma-renting from the bank. 75% realize having long-term massive leveraged debt is bad. I should hope so. Half who realize it are doing something about it, but how much are they doing? Are they paying $100 extra a month? Are they rounding $799 to $800? How much extra are they paying and what percent are paying how much extra? Useless propaganda without more info.

Post Mortgage Contact Could be Beneficial to Maintaining and Growing Business
Is CMHC selling something? I just lost track of who the audience is. I thought it was the press, I'll confess. Following the "CMHC Can Help" button leads to a link fest invitation. Is that the audience, mortgage brokers who will register for their regular feel good newsletters and give them links? Huh, looks like it. Please, mortgage brokers, sooth the fears of mortgage consumers for us. Please.

Good Level of Financial Literacy and Prudence Observed Among Mortgage Consumers… However Opportunities Exist for Improvement
Thank goodness. Let's see what data leads them to assert that.
Overall, 80% of recent buyers reported doing some level of household budgeting. While establishing this budget, the majority also reported that they had assessed to some degree the potential impact of rising interest rates on the budget (71%), assessed to some degree the potential impact of a loss of income on the budget (69%), or assessed to some degree the potential impact of rising expenses on the budget (79%).
I'll confess I did not see the original survey, nor is a copy of it provided that I could find. But if you make a standard survey with 5 choices, very X, somewhat X, average x, somewhat not x, very not x, and people randomly selected from the options, guess what you get if you what to assert y% responded that they somewhat x just like every single line reported in the above paragraph? Yup, 80%. There is also a bias on these surveys that people will tend not select the options on the ends. Add that up and realize that only 71% somewhat assessed the impact of rising interest rates and I'd say you have a problem. 30% of mortgagees in the last 12 months (this includes new buyers, renewers, refinancers, a whole lot of potential households, in other words), gave absolutely no consideration to future rising interest rates.

I'll just leave off with this:
Tools and resources from CMHC for mortgage professionals are available to provide your clients with a more holistic financial experience.

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