30% of first-timers believe interest rates will stay put for the next five years – 1981 can never happen again, right?
I can’t say any of this survey information surprises me – 1981 is so far removed from the minds of most young people that an interest rate increase must seem impossible. But I remember my family building homes and selling real estate in Abbotsford and Mission in 1981 and the difficulty a quick painful interest rate increase can have on an industry like ours. Mind you I was only 4 years old, I’m not sure if a remember it as much as I’ve heard a lot about 1981….
I don’t remember Ronald Reagan succeeding Jimmy Carter as President January 1981. I can’t say I really remember watching Super Bowl XV: The Oakland Raiders defeat the Philadelphia Eagles 27–10. It didn’t really hit my radar when Daylight saving time was introduced in the USSR in April 1981. Sadly 1981 also saw birth of AIDS when The Centers for Disease Control and Prevention reported the first recognized cases of AIDS. My father (Walt Browne) definitely never told me stories about MTV (Music Television) launch on cable television in the United States on 1 of Aug 1981 but I definitely have heard numerous stories about interest rates JUMPING up from 9% to 18% in that year.
A couple of recent surveys shed interesting light on the attitudes of home buyers in Canada which included Abbotsford and the Fraser Valley. Both surveys — one by one of the big banks and the other by CMHC — suggest home buyers are getting smarter and more sophisticated. But there some who seem to be surprisingly naive.
The bank survey, which polled about 2,000 first time buyers online, indicates more than 30% of first-timers believe interest rates will stay put for the next five years. It is hard to know where this thinking comes from based on the Bank of Canada’s clearly stated desire to raise rates and all of the projections from economists across the board. On the other hand the same survey suggests more than three-quarters of first-timers plan to “stress-test” their mortgages to make sure they can handle higher rates.
The CMHC report took a broader approach and surveyed about three thousand “mortgage consumers”. Impressively, more than 80% of those surveyed said they were satisfied with their mortgage experience and were confident they got the best mortgage for their needs. But a closer examination of the responses indicates there is room for improvement. Only 49% of people who used a broker (and 33% of those who used a lender) were given follow-up contact. Of those who received follow-up from their broker, 70% “totally agreed” they were satisfied. Just 42% of those who did not get follow-up agreed they were “totally satisfied”.
The survey also reinforces the increasing use of the internet in making mortgage decisions. Fully, two-thirds of people looking for a mortgage did research online. Eighty-four percent of respondents used the web for rate comparisons and a clear majority went looking for mortgage calculators.
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