Consumer Choices and Satisfaction
September 30, 2010 by Admin
The survey found that Canadians remain highly satisfied with the terms of their mortgages, and their experiences in obtaining their mortgages:
- 15% indicate they are completely satisfied with the terms of their mortgages (giving a rating of 10 out of 10) and a further 55% are satisfied (ratings of 7 to 9 out of 10). Combining these results, 70% are satisfied to some degree.
- 22% give a neutral satisfaction rate (5 or 6 out of 10).
- Just 8% are dissatisfied to some degree (Ito 4 out of 10).
- On average, the satisfaction rate is 7.3 out of 10.
Satisfaction with mortgage experiences was very similar, and the average rating was fractionally higher, at 7.5 out of 10.
About one-in-five (18%) of mortgage borrowers took equity out of their home in the past year, unchanged from a year ago. The average amount is estimated at $46,000. These results imply that the total amount of equity take-out during the past year has been $46 billion. The most common use for the funds from equity take-out is home renovations, which accounted for about $15 billion of the equity take-out. Debt consolidation and repayment account for $13.5 billion of the total take-out. This part of the total equity take-out would result in corresponding reductions for other forms of consumer debt.
The study asked mortgage borrowers about their mortgage term: 66% of mortgage borrowers reported having a term of four to five years. Just 8% have terms of more than 5 years, and the remaining borrowers (26%) have terms of less than 5 years.
Concerning types of mortgages, fixed rate mortgages remain most popular (66%). A significant minority (29%) are variable and adjustable rate mortgages. Just 4% of mortgages are a combination of fixed and variable rates. The split between fixed rate and variable rate mortgages has been quite stable over time. This is surprising, since there have been significant changes in the relative rates for these types of mortgages. During the past two years, rates for variable rate mortgages have been considerably lower, yet there has not been a major shift in type selection. The implication is that choice of mortgage types is influenced more by individuals’ assessments of risks, rather than based on cost differences.
With regard to mortgage amortization periods, 22% of mortgages in Canada have amortization periods of more than 25 years. , The share is quite high (42%) among home owners who have, during the past year, taken out a new mortgage on a newly purchased home or condominium.