The recent announcement that Canada's largest volume mortgage broker has been purchased by GMAC-Residential Funding of Canada, a subsidiary of General Motors Acceptance Corp., is good news for home buyers. It brings even more competition to a red-hot mortgage market.

Mortgage Intelligence was sold to GMAC-RFC by FiLogix Inc, which now plans to concentrate on its core business of providing software for the real estate and mortgage industry. FiLogix says it processed approximately $12 billion in residential mortgages on behalf of major lenders in 2001.

Mortgage Intelligence says now that the company has access to capital funds, it will be able to develop its own mortgage products. But it will also continue to be a mortgage broker, acting as a distributor for banks and trust companies.

A recent survey by the Canadian Institute of Mortgage Brokers and Lenders (CIMBL) shows that more Canadians are using mortgage brokers more than ever before. It says one-quarter of mortgage consumers used brokers in 2001, up from 14 per cent two years ago. The survey, which was sponsored and managed by Canada Mortgage and Housing Corp., says referrals from real estate agents accounted for 40 per cent of the consumers who used mortgage brokers last year.

However, Canadians still have a lot of loyalty to their current banks when it comes to arranging a mortgage. Another survey, conducted for the Royal Bank of Canada by Ipsos-Reid, says 63 per cent of Canadians would go to their current bank for a mortgage if they were to buy a home in the next two years. However, that's down three percentage points from last year.

Arranging a mortgage via the Internet is a non-starter for most Canadians, according to both surveys. The Royal Bank survey says 83 per cent of Canadians would prefer a sit-down meeting at a bank to arrange a mortgage, and that only three per cent would like to use the Internet to strike a deal. The CIMBL survey shows that only 30 per cent of consumers looked on the Internet for general information (down from 32 per cent last year) but that few of them actually arranged a mortgage online.

Low interest rates are the number one reason for the housing boom across Canada, so it's not surprising that low rates are also the main thing consumers are looking for when choosing a lender. The terms available for the mortgage, such as payment options, rank second, while the ability to provide advice and information ranked third, according to the Royal Bank survey.

The survey says that 56 per cent of Canadians who own a home carry a mortgage, which is up three per cent from last year, reflecting the record number of real estate sales during the last year. The average amount of current owners' original mortgage is $97,504.

The average amount still owing on homeowners' mortgages is $75,067. British Columbia residents carry the highest mortgage ($114,697), while the lowest average still owing is in Quebec ($69,056).

Of those who have a mortgage, almost one-quarter say they would borrow against their home equity. Most would use the money to renovate their homes (41 per cent) while 11 per cent would use it to pay off bills and seven per cent would use it for other investments. Six per cent would use the money for another property purchase.

Almost one-third of those surveyed said that when they take out a mortgage, they get more money than they need to pay for the home so that they can pay for additional expenses such as window coverings, kitchen appliances, furniture, an alarm system and outdoor tools.

The Royal Bank says 69 per cent of Canadians surveyed own a home. The highest rate of home ownership is the in Atlantic Provinces (80 per cent), while the lowest is in Quebec (60 per cent).

Published: April 11, 2002

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Jim Adair is editor of REM: Canada's Real Estate Magazine, a business publication for real estate agents and brokers. He has been writing about Canadian real estate, home building and renovation issues for more than 30 years. You can contact Jim at .