Canadians embrace longer mortgage product
VANCOUVER — More than a third of new mortgages being taken out in Canada are now amortized for more than 25 years, a portion labeled by one expert as “phenomenal” for a relatively new mortgage product.
“From the fall of 2006 through the fall of 2007, 37 per cent of all new mortgages in Canada were for amortizations longer than 25 years,” said Jim Murphy, president and chief executive of the Canadian Association of Accredited Mortgage Professionals. “Of all the mortgage products that have been introduced, the ones longer than 25 years are the most popular ... 37 per cent is quite high. It is phenomenal for a product that is relatively new.”
Among all outstanding mortgages last year, nine per cent were pegged with payoff dates stretching more than 25 years all the way to 40 years.
The embracing of the 25year-plus mortgage comes at a time when British Columbians are already paying the highest proportion of their income among all Canadians to housing costs, according to Statistics Canada’s housing and shelter costs report released yesterday.
Across the country the percentage of Canadian homeowners who have a mortgage is at a 25-year high with almost six out of every 10 homes mortgaged, according to Statistics Canada.
At the same time, Canada’s home ownership rate is at its highest level since 1971, with more than two-thirds of Canada’s 12.4 million households owning their home.
In British Columbia the 57.6 per cent of owners who have a mortgage is close to the national average of 57.9 per cent, but B.C. residents have the highest percentage of households shelling out more than 30 per cent of their income on shelter.
High home prices in B.C. are to blame.
Among all households, almost 29 per cent of British Columbians are spending more than 30 per cent of their income keeping a roof over their head, according to statistics compiled from the 2006 census. Nationally, 24.9 per cent of households were in that category.
B.C. renters fare the worst at 44 per cent, while 22.8 per cent of B.C. homeowners, up from 20.7 per cent in the 2001 census, are spending more than 30 per cent of their income on shelter costs.
That compares to 17.8 per cent of home owners across Canada who see more than 30 per cent of their income go to housing.
The B.C. numbers outstrip the national average of 24.9 per cent by a wide margin and are higher than five years ago when 28.6 per cent of households in the province spent 30 per cent or more of their income on shelter.
Vancouver was second only to Toronto in the proportion of households spending 30 per cent or more of their income on shelter among census metropolitan areas.
Not surprisingly for a province that in its most recent real estate stats found the average price of a detached house in Greater Vancouver to be $771,250 and in Greater Victoria $601,897, B.C.’s metropolitan areas rank as the condo leaders in Canada.
Condo ownership accounted for 31 per cent all home ownership in Vancouver in 2006, for 23.8 per cent in Abbotsford, 21.2 per cent in Victoria and 21.1 per cent in Kelowna.