HERE'S some good news for Canadian homeowners -- mortgage rates should remain at historically low levels for up to another 18 months, according to the group that represents mortgage brokers in Canada.
"The bottom line is that during the next year, renewal of mortgages is likely to result in reduced interest costs," the Canadian Association of Accredited Mortgage Professionals said in its Annual State of the Residential Mortgage Market in Canada report released Tuesday.
CAAMP president and CEO Jim Murphy said in a later interview rates aren't likely to go too much lower -- the average mortgage rate in Canada in the first nine months of 2013 was 3.06 per cent -- because they're already at historic lows.
"I think the important point is that we're going to maintain the record lows we have now for the next 12 to 18 months," he added.
Murphy also noted CAAMP chief economist Will Dunning, who authored the report, isn't the only one who foresees interest rates remaining fairly stable in 2014. The Bank of Canada is saying much the same thing, he said, "and I think a lot of the economists are thinking now that we're not going to see any interest rate increase until 2015."
The new report also reiterates the findings of a 2011 CAAMP study that concluded even if interest rates were to jump by two percentage points, 98 per cent of Canadian homeowners could handle the increase because "Canadian mortgage borrowers and lenders have been prudent and there is very substantial room to absorb higher interest rates."
It also notes last month's survey of 2,000 Canadians, upon which Tuesday's report is based, found 80 per cent of the respondents used terms like "comfortable," "confident," "content," and "secure" to describe how they feel about their mortgages.
The CAAMP report was one of two housing-related reports released Tuesday. The other, by global rating agency Fitch Ratings, was less upbeat.
Fitch Ratings forecasts home prices in Canada are in for a "soft landing," and will flatten out or decrease slightly over the next five years.
It estimates current house prices are overvalued by up to 26 per cent in some regions and will fall by as much as 10 per cent.
It also says many homebuyers have financially stretched themselves to borrow for their home purchase and will be in for a shock once interest rates start to climb.
Other highlights from the CAAMP report were:
- -- Confidence in the mortgage market remains strong, with less than 10 per cent of Canadians expecting the housing bubble will burst.
- -- Sixty-eight per cent of Canadians feel mortgage debt is "good debt."
- -- Fifty-seven per cent of the new homes purchased in the past year were bought by first-time buyers.
- -- More than 80 per cent of Canadian homeowners have at least 25 per cent equity in their homes.
- -- Thirty-eight per cent of mortgage-holders took steps this year to accelerate their repayments and shorten their amortizations.
-- with files by The Canadian Press