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Mortgages/Residential Mortgage Lending - Canada - March 2016

"A current banking relationship is the most important choice factor for consumers when choosing a mortgage lender, underlying the importance of a strong branch network and motivated front-line staff to cross-sell mortgage products."
– Sanjay Sharma, Senior Financial Services Analyst

This report covers the following issues:

  • Two out of three Canadians find the housing market overvalued
  • TD is the market leader
  • Current banking relationship is the strongest choice influencer
  • Around three in five mortgage holders have a fixed rate mortgage
  • British Columbians have higher mortgage debt amounts

The mortgage marketplace is dominated by the major banks but there is strong competition, not only among them, but from smaller virtual banks, regional banks, private lenders and credit unions. This Report covers consumer behaviour around choice of financial institution, factors that influence lender choice, types of mortgages owned, debt amounts and attitudes towards the housing market and mortgages in general.

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Table of contents

  1. Overview

      • Regional classifications
        • Definitions
          • Income
          • Executive Summary

              • The issues
                • Two out of three Canadians find the housing market overvalued
                  • Figure 1: Attitudes related to the housing market, December 2015
                • TD is the market leader
                  • Figure 2: Choice of financial institution for mortgages, December 2015
                • Current banking relationship is the strongest choice influencer
                  • Figure 3: Choice factors when choosing a mortgage lender, December 2015
                • Around three in five mortgage holders have a fixed rate mortgage
                  • Figure 4: Type of mortgage owned, December 2015
                • British Columbians have higher mortgage debt amounts
                  • Figure 5: Amount of mortgage debt outstanding, December 2015
                • The opportunities
                  • Success in general banking translates to success in mortgage lending
                    • Figure 6: Competitive rank of FIs, choice of main FI and choice for mortgages, November 2014 and December 2015
                  • Aligning choice factors with age segments
                    • Figure 7: Rank of choice factors when choosing a mortgage lender, by age, December 2015
                  • Mortgage Brokers: high satisfaction rates but usage is fairly low
                    • Leveraging the power of recommendations
                      • What it means
                      • The Market – What You Need to Know

                        • Canada’s population is expected to age in the coming years
                          • The population is growing and ethnically diverse
                            • Proportion of highly indebted households continues to rise
                              • IMF downgrades 2017 economic forecast for Canada
                              • Market Factors

                                • Canada’s population is expected to age in the coming years
                                  • Figure 8: Population aged 65 years and over in Canada, historical and projected (% of total), 1971-2061
                                  • Figure 9: Projected trends in the age structure of the Canada population, 2014-19
                                • The population is growing and ethnically diverse
                                  • Proportion of highly indebted households continues to rise
                                    • IMF downgrades 2017 economic forecast for Canada
                                      • Interest rates in Canada still at very low levels
                                      • Market Perspective – What You Need to Know

                                        • New down-payment rules introduced
                                          • CMHC finds foreign ownership of condos low but growing
                                            • Federal government closely monitoring shadow mortgage lenders
                                            • Market Perspective – Overview

                                                • New down-payment rules introduced
                                                  • CMHC finds foreign ownership of condos low but growing
                                                    • Figure 10: Foreign ownership of condominiums in major Canadian cities, 2014 and 2015
                                                  • Federal government closely monitoring shadow mortgage lenders
                                                  • Key Players – What’s New

                                                    • Meridian Credit Union kicks off springtime mortgage war
                                                      • Manulife Mortgages to be sold through mortgage brokers
                                                        • CAAMP becomes Mortgage Professionals Canada
                                                          • Google exits mortgage comparison website
                                                          • Key Players – Marketing Campaigns

                                                              • TD’s mortgage payment vacation
                                                                • Figure 11: TD’s mortgage payment vacation email, September 2015
                                                              • Scotiabank’s Switch Offer
                                                                • Figure 12: Scotiabank direct mail offer, May 2015
                                                              • CIBC’s Cash Back Offer
                                                                • Figure 13: CIBC email mortgage cash back offer, October 2015
                                                            • The Consumer – What You Need to Know

                                                              • Two out of three Canadians find the housing market overvalued
                                                                • TD is the market leader
                                                                  • Current banking relationship is the strongest choice influencer
                                                                    • Around three in five mortgage holders have a fixed rate mortgage
                                                                    • Housing Market in Canada

                                                                      • Two out of three Canadians find the housing market overvalued
                                                                        • Figure 14: Attitudes related to the housing market, December 2015
                                                                      • Around half of Canadians agree that immigration fuels housing demand
                                                                        • Younger Canadians more inclined to believe Canadian society places too much importance on home ownership
                                                                          • British Columbians most likely to believe that foreign buyers are driving the real estate market in major cities
                                                                            • Figure 15: Opinions about housing demand and market fundamentals, December 2015
                                                                        • Competitive Position

                                                                          • TD is the market leader
                                                                            • Figure 16: Choice of financial institution for mortgages, December 2015
                                                                          • Competitive landscape for general banking and mortgages is very similar
                                                                            • Figure 17: Competitive rank of FIs, choice of main FI and choice for mortgages, November 2014 and December 2015
                                                                          • Brand perception and its impact on consumer choice
                                                                            • Desjardins is way ahead of the pack in Quebec
                                                                              • Figure 18: Choice of financial institution for mortgages, Quebec, December 2015
                                                                            • Some 8% of mortgage holders use private lenders
                                                                              • Over-45s relatively more likely to use credit unions
                                                                                • Figure 19: Choice of FI for mortgages, by age, December 2015
                                                                            • Choice Factors

                                                                              • Current banking relationship is the strongest choice influencer
                                                                                • Figure 20: Choice factors when choosing a mortgage lender, December 2015
                                                                              • Low interest rates most important factor for 18-34s
                                                                                • Figure 21: Rank of choice factors when choosing a mortgage lender, by age, December 2015
                                                                              • Mortgage Brokers: high satisfaction rates but usage is fairly low
                                                                                • Leveraging the power of recommendations
                                                                                    • Figure 22: # TD Automated thanking machines campaign, July 2014
                                                                                  • Younger mortgage holders will feel the pinch more if rates increase
                                                                                    • Figure 24: Attitudes towards mortgage payments, December 2015
                                                                                  • Growth of mortgage debt and its implications
                                                                                  • Type of Mortgages Owned

                                                                                    • Around three in five mortgage holders have a fixed rate mortgage
                                                                                      • Figure 25: Type of mortgage owned, December 2015
                                                                                    • Higher income earners and Chinese Canadians over-index on variable rate mortgages
                                                                                      • Figure 26: Type of mortgage, by income level, December 2015
                                                                                    • Younger consumers more likely to have an overall home equity product
                                                                                      • Figure 27: Mortgage type, by age, December 2015
                                                                                    • Females and younger mortgage holders more likely to feel that switching lenders is too much work
                                                                                      • Figure 28: Attitude regarding switching lenders, December 2015
                                                                                  • Appendix – Data Sources and Abbreviations

                                                                                    • Data sources
                                                                                      • Consumer survey data
                                                                                        • Consumer qualitative research
                                                                                          • Abbreviations and terms

                                                                                          Mortgages/Residential Mortgage Lending - Canada - March 2016

                                                                                          US $3,995.00 (Excl.Tax)