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.

 

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.

Katherine Martin


Origin Mortgages

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


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