Nov. 27, 2009- Experts say that the Canadian mortgage market is experiencing many changes compared to peak times in the real estate markets of the past.
"In terms of amortization periods, it was 25 or bust until three years ago when 30, 35, and 40 year amortizations became available," says a recent Scotiabank report.
Now, after a short three year period, 18 per cent of outstanding mortgages have amortization periods of over 25 years. Ten per cent of mortgages in Canada are 35 to 40 years.
When it comes to equity, the report says that equity take-out financing used to be far more difficult before flexible mortgages and secured lines came into the picture.
In the past year, 18 per cent of Canadians withdrew equity from their homes. The average amount of the equity take-outs was $41,000 and the national total was $46 billion, according to the report.
Furthermore, 52 per cent of Canadians who withdrew equity used some form of debt consolidation. Forty per cent of those used some of the equity for renovations, 13 per cent used some for purchases and education, 16 per cent used equity for investment purposes, and nine per cent withdrew equity for other reasons, such as consumption, according to the report.
The fraction of people using their equity for similar purposes is apparent in the United States as well.
"The results are similar to what surveys are saying in the US regarding the use of mortgage equity withdrawals during their peak period to influence," according to the report.