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One of the reasons we look at historical economic trends is that most of the time, the past gives us reliable clues about what might happen in the future.

A new report compiled by the Chief Economist of Mortgage Professionals Canada (MPS), showed that confidence in the housing sector has improved over the last two months. The survey occurred from August 07th to 24th and it focused on 2 groups: non-home owners who think that they might buy a home during the next 3 years and mortgage holders.

As an alternative to forecasting, in this report, they are creating some new data on shifting attitudes and expectations about the housing market. This information will help to interpret evolving market conditions and possibly, provide clues about future changes.

Attitudes and expectations on topics related to housing markets and mortgages.

For a decade, consumer surveys have investigated opinions on some housing – related and mortgage-related issues. The new data indicates that, in general, opinions have not become more negative during this emergency period – mortgage holders are ‘actually showing reduced levels of regret about their mortgages’ and homeowners’ have not become more worried about their ability to weather a downturn in the housing market’.

Some interesting results:

  • Mortgage holders are actually showing reduced levels of regret about their mortgages.
  • Homeowners have not become more worried about their ability to weather a downturn in the housing market: however, they show a small reduction in confidence about the hypothetical impact of higher interest rates.
  • There is still a high degree of confidence that real estate is a good long-term investment.
  • There is still a strong opinion that mortgages are – ‘good debt‘.
  • Not surprisingly, there has been a downshift in confidence about the economic outlook, and there has not been a material improvement in the second wave of the survey. However, it might be surprising that the degree of confidence is almost exactly at the neutral level.
  • There is now more confidence that this is a good time to buy a home or condominium.
  • There is a big downshift in expectations about the growth of house prices in the first wave of the survey, but there was a substantial rebound in the second wave. In both waves, the average score given was about the neutral level, meaning that there are expectations that prices will continue to rise, but not as rapidly as in the past.
  • Concerning interest rates: Every time we have asked, the responses have shown an expectation that rates will rise. This time is not an exception, although the new data from both of the two survey waves indicate that the expected amount of increase might be the smallest we’ve ever seen.
  • Anxiety levels about the personal economic effects of COVID-19 is higher for non-owners than for owners. This is because non-owners tend to be younger and/or have lower incomes, and these groups have been hit harder by the economic fallout.
  • Canadians continue to see home ownership as primarily a place to live, and secondarily as an investment. In the COVID-19 period, the opinion has not budged: at 75% ‘a place to live’ in the first wave and a very similar 76% in the second wave. Canadians see their homes as three-quarters a place to live and on-quarter as an investment.
  • Very few Canadians regret becoming homeowners and that opinion has not changed in the COVID-19 period.

Opinions about the mortgage deferral program.

  • A large majority of mortgage holders (74%) expect that they will have ‘no difficulty’ making their payments, and a further 20% expect ‘some difficulty’. This leaves 6% who expect a higher degree of difficulty. These figures show a very small improvement compared to the first wave (when 72% expected no difficulty).
  • The share of mortgage holders who see the program as supportive (54%) is almost double the share that believes it takes advantage of consumers (29%). Very few (4%) believe that the program should not be allowed and 14% have no opinion.
  • The Survey asked for opinions about what is motivating the banks to allow deferrals, from a list of 5 options. Slightly more than half (56%) selected one of the altruistic motives and 29% chose the selfish motive. 15% chose the option that banks are only doing what the government wanted them to do.

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