Blog Post

2014 CMHC First-Time Homebuyers Survey

Katherine Martin • December 14, 2014

In May 2014, CMHC completed an on-line survey of 860 First-Time Buyers from across Canada. All respondents had undertaken a mortgage transaction in the past 12 months and all were one of the prime decision-makers within their household for matters relating to housing finance and mortgages.

This information appears on the CMHC website here.

First-Time Buyers and Technology

The majority of First-Time Buyers (84%) went online when gathering information about mortgage options and features (76% for other mortgage consumers). Among these, more than half (55%) went to lender sites and one-third went to broker sites. Compared to other mortgage consumers, First-Time Buyers showed a higher likelihood of visiting a broker site (33% vs. 24%). About one-in-five (22%) reported visiting web sites of both lenders and brokers.

Overall, First-Time Buyers were much more active online compared to other mortgage consumers. First-Time Buyers who went online undertook a variety of activities with 80% using a mortgage calculator (72 % for other mortgage consumers), 63% completing a financial self assessment (43% for other mortgage consumers), 42% either got pre-approved or filled an online form (24% and 23% respectively for other mortgage consumers), and 20% engaged in an online conversation (11% for other mortgage consumers).

The use of mobile devices to access mortgage related information was more prominent among First-Time Buyers (23% vs. 14% among other mortgage consumers). However, desktops are still preferred by almost nine-in-ten First-Time Buyers.

The use of social media as a tool when looking for a mortgage is increasing and was much more prevalent among First-Time Buyers.

In 2014, 40% of First-Time Buyers going online looked to social media when researching their mortgage options.

This up from 28% one year ago, and compares to only 22% among other mortgage consumers.

Among First-Time Buyers using social media, 58% used Facebook, and 38% used either online forums or blogs. Overall, online forums and blogs were found to be the most useful social media platforms for mortgage related information. Half of First-Time Buyers using online forums and 44% using blogs rated the information obtained through these platforms as “very useful.”

Social media is starting to play a role in how First-Time Buyers interact online. About one-in-five using social media (21%) posted a review or rating of either a broker or lender and 30% used social media to find a referral to use a specific professional (i.e. broker, lender, real estate agent or other professional).

Homebuying Process

During the home buying process First-Time Buyers interacted with a variety of individuals. Most notably, about three-quarters were in contact with a family member (79%), a mortgage lender (73%), or a real estate agent (72%). Slightly more than half (55%) reported interacting with a mortgage broker.

As expected, family members were greatly relied upon during the homebuying process. About half (53%) reported that family members “greatly influenced” their homebuying decisions. This compares to 37% for real estate agents, 36% for brokers, and 28% for lenders.

In terms of the individual who had most influence on the buying decision, 38% of First-Time Buyers mentioned a family member, 17% a real estate agent, 14% a mortgage lender, and 10% a mortgage broker.
Overall, 60% of First-Time Buyers mentioned that they had concerns during the home buying process (compared to 46% for Repeat Buyers). The nature of the concerns or uncertainty stems mostly from unforeseen costs. In fact, 40% of First-Time Buyers actually incurred unexpected expenses during the homebuying process. Among those incurring unforeseen costs, the most common were adjustments (40%), lawyer fees (36%) and land transfer taxes (30%).

First-Time Buyers’ Experience with Lenders & Mortgage Brokers

Over half (54%) of First-Time Buyers reported arranging their mortgage with the financial institution they were dealing with the most. In comparison, among Repeat Buyers, 67% were loyal to their existing lender when arranging their mortgage.

Approximately four-in-ten (37%) of First-Time Buyers received a recommendation to use a specific mortgage professional. These recommendations came primarily from family members and real estate agents. Among those receiving a recommendation to use a specific lender, 37% came from a family member and 22% from a real estate agent. In terms of brokers, 33% of recommendations came from a family member and 30% came from a real estate agent.

In the 2014 survey, almost half (48%) of First-Time Buyers arranged their mortgage through a mortgage broker…

compared to 40% among Repeat Buyers.

Among First-Time Buyers using a broker, 50% reported obtaining a mortgage with a lender other than the financial institution they were dealing with the most at the time. This compares to only 27% among First-Time Buyers dealing directly with their mortgage lender. Therefore, First-Time Buyers using a broker were 85% more likely switch financial institutions when getting a mortgage.

When it comes to providing advice or guidance, First-Time Buyers were equally well served by brokers and lenders. About 70% or more reported receiving advice on how much mortgage they could afford, specifics regarding fixed versus variable rates and mortgage terms and conditions, or advice on long-term mortgage strategies.

Although most First-Time Buyers received advice from their mortgage professional when arranging their mortgage, fewer than half received any form of post-transaction follow-up contact. In fact, following their mortgage transaction, only 41% of those who used a lender were contacted and 49% of those who used a broker were contacted.

In most cases the purpose of the post-transaction follow-up by mortgage professionals was simply to thank the customer, mentioned by 61% of those who were contacted by their lender and by 67% of those who were contacted by their broker. Generally, the post transaction contact occurred within one week to one month after the mortgage transaction was completed (86% for broker clients and 75% for lender clients).

Most First-Time Buyers were satisfied with their mortgage professional with 80% indicating that they were satisfied with their lender and 70% with their broker. However, broker clients tended to show a greater likelihood of using their broker again in the future. Almost four-in-ten (38%) “totally agreed” they would use their broker again in the future. This compares to three-in-ten (31%) of lender clients indicating they would use their lender for their next mortgage transaction.

Attitudes of First-Time Buyers

In terms of assessing whether they got the best mortgage deal for their needs, First-Time Buyers were not as confident as Repeat Buyers. Only 33% of First-Time Buyers “totally agreed” that they got the best mortgage deal for their needs, compared to 53% for Repeat Buyers.

First-Time Buyers also tended to have a lower understanding of mortgage options and were more likely to find the mortgage process difficult. Nearly four-in-ten (37%) of First-Time Buyers “totally agreed” they had a good understanding of the mortgage options available to them. This compares to 59% among Repeat Buyers. Similarly, only 28% of First-Time Buyers “totally agreed” that the process of getting a mortgage was easy and straight forward (44% for Repeat Buyers).

Providing advice on long-term mortgage/financial strategies can be of great help to First-Time Buyers. Providing such advice can also increase the likelihood of repeat business by 86%. More specifically, 41% of First-Time Buyers receiving advice on long-term mortgage strategies “totally agreed” that they would likely use the same mortgage professional to arrange their next mortgage transaction, compared to only 22% among those not receiving this kind of advice.

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Katherine Martin

Origin Mortgages

Phone: 1-604-454-0843
Email: kmartin@planmymortgage.ca
Fax: 1-604-454-0842

Improving Your Credit Score

By Katherine Martin • February 19, 2025

Your credit score and how you manage credit are huge factors in qualifying for a mortgage. If you want the best interest rates and mortgage products available on the market, you want a high credit score. Here are a few things you can do to improve your credit score. Make all your payments on time. Making your payments on time is so important; in fact, it might just be the most important factor in managing your credit. Here's how credit works. When you borrow money from a lender, you agree to make payments with interest on a set schedule until the debt is repaid in full. Good credit is established and maintained by making your payments on time. However, If you break the terms of that schedule by not making your payments, the lender will report the missed payments to the credit reporting agencies, and your credit score suffers. It’s that simple. The more payments you miss, the lower your score will be. If you fail to make payments for over 120 days, the lender will most likely send your debt to be recovered by a collection agency. Collections stay on your report for a long time. So the moment you realize you have missed a payment or as soon as you have the money for it, make the payment. If something prevents you from making a payment, consider contacting the lender directly to let them know what happened and work out an arrangement to make the payment as soon as possible. It's good to note that lenders only report late payments after a payment is 30 days late. If you miss a payment on a Friday and catch it the following Monday, you won't have anything to worry about - except maybe an NSF fee. Now, just because payments don't report until being 30 days late, don’t get comfortable with making late payments; the best advice is to pay your debts on time, as agreed. Stop acquiring new credit. If you already have at least two different trade lines, you shouldn’t acquire new trade lines just for the sake of it. Of course, if you need to borrow money, like to purchase a vehicle to commute to work, go ahead and apply. Just remember: having more credit available to you doesn’t really help your credit score. In fact, each time a potential lender looks at your credit report, it may lower your credit score a little bit. With that said, if you already have two different trade lines and your lender offers you an increase on your limit, take it. A credit card with a $10k limit is better for you than a credit card with a $2k limit because how much you spend compared to your credit card's limit impacts your credit score. This leads us directly into the next point. Keep a reasonable balance. The more credit you use compared to the limit you have, the less creditworthy you appear. It’s better to carry a reasonable balance (15-25% of the card’s limit) and pay it off each month than to max out your credit cards and just make the minimum payments. If you have to spend more than 25% of your card limit, try to remain under 60%. That shows good utilization. Paying down your credit cards every month and carrying a zero balance will undoubtedly improve your credit score. Check your credit report regularly. Did you know that roughly 20% of credit reports have misinformation on them? Mistakes happen all the time. Lenders misreport information, or people with the same names get merged reports. Any number of things could be inaccurate without you knowing about it. You might even have become a victim of fraud or identity theft. By checking your credit regularly, you can stay on top of everything and correct any errors promptly. Both of Canada's credit reporting agencies, Equifax and Transunion, have programs that, for a small fee, will monitor and update you on any changes made to your credit report. Handle collections immediately. When checking your credit report for accuracy, if you happen to find a collection has been registered against you, deal with it immediately. It could be a closed-out cell phone account with a small balance owing, a final utility bill that got missed, unpaid parking tickets, wage garnishments, or spousal support payments. Regardless of what it is, it will harm your credit score if it's registered on your credit report. The best plan of action is to handle any collections or delinquent accounts as soon as possible. Use your credit card. If you have acquired credit cards to build your credit score, but you rarely use them, there is a chance the lender might not report your usage, and that won’t help your credit score. You'll want to make sure that you use your credit at least once every three months. Many people find success using their credit cards for gas and groceries and paying off the outstanding balance each month. There you have it. Regardless of what your credit looks like now, you will continue to increase your credit score if you follow the points outlined above. If you're looking to buy a property and you’d like to work through your credit report in detail, let’s put together a plan to get you qualified for a mortgage. Get in touch anytime; it would be a pleasure to work with you!

How To Establish New Credit

By Katherine Martin • February 12, 2025

If you’re new to managing personal finance and you want to learn about credit, you’ve come to the right place. Establishing new credit is a bit of a catch-22. To build a credit history, you need credit. But it’s hard to get credit without having a credit history. So, where do you start? Well, the first thing you should know is that building credit takes time. It’s not something that happens overnight. If you’re looking to secure mortgage financing, you will want to have a minimum of two trade lines (credit cards, loans, or lines of credit) with a minimum limit of $2500, reporting for at least two years. If you don’t have any credit yet, the best time to get started is right now. However, that may be difficult because, as we've already identified, without a credit history, most lenders won’t feel confident about taking a chance on you. What’s the solution? Consider a secured credit card. With a secured credit card, you make a deposit upfront that matches the amount you want to borrow. A reasonable amount would be $1000 deposited on a single secured credit card. You then use your secured credit card to make household purchases and regular utility payments, paying off the total balance each month. If you default on the money borrowed for whatever reason, the lender will retain the money you put up as collateral. When looking for a secured credit card, be sure to ask whether they report to the two nationwide credit bureaus, Equifax and TransUnion. If the credit card company doesn't report, the credit card account will be useless for your purposes; move on until you find a company that reports to both credit bureaus. Once your secured credit card begins reporting to the credit bureaus, you begin to have a credit score; usually, this takes about three months. Now you can start to seek out a second trade line in the form of an unsecured credit card. Don’t forget to ensure that this card reports to both of the credit reporting agencies. Another option at this point could be a car loan. From here, you simply want to make all your payments on time! But what happens if you’re looking to secure mortgage financing before you have a fully established credit report? Well, if you have someone who would consider co-signing, you can certainly go that route. The mortgage application will depend on their income and credit report, but your name will be on the mortgage. Hopefully, when the mortgage is up for renewal, you’ll have the established credit required to remove them from the mortgage and qualify on your own. Although establishing credit takes a minimum of two years, it really begins with putting together a plan. If you’d like to discuss anything credit or mortgage-related, please get in touch!