A new survey by the Canadian Association of Accredited Mortgage Professionals (CAAMP) warns of a weakening housing market with economic implications. Chief economist Will Dunning says that government restrictions on mortgage borrowing have set the stage for a steady decline in new home building, which will trigger job losses and a drop in housing related economic activity by 2015.

“CAAMP has argued that government efforts to slow the housing market have long-term negative economic consequences and the data continues to support our assessment,” says Dunning. “Until now, housing has played a major role in the recovery from the 2008/09 recession.  That economic driver is disappearing as we see housing-related jobs dry up and consumer confidence erode at a time when the national recovery is struggling to pick up steam.”

The survey of Canadian mortgage holders found:

* An average of 69 per cent have fixed-rate mortgages.

* Their average mortgage rate is lower – 3.52 per cent compared to 3.64 per cent last year.

* 18 per cent of mortgage holders increased their mortgage payments in the past year. An additional 16 per cent made lump sum payments on their mortgages during the past year.

* About eight per cent of all homeowners took out equity, averaging $48,000, similar to 2012.

* 80 per cent of mortgages have an original amortization of no more than 25 years.

* Most borrowers plan to repay early – the expected average is 21.6 years.

* 85 per cent of mortgages taken out in the last year were fixed rate.

“The CAAMP survey demonstrates that Canadians with mortgages are managing debt responsibly, negotiating low interest rates and paying down their mortgage faster than required,” says Jim Murphy, president and CEO of CAAMP.  “What is cause for concern is that the housing market, an important engine of growth for the Canadian economy, is slowing to such an extent that without any change, it could take another five years to recover.”

CAAMP says that during the past nine months, the dollar value of housing resale activity was 8.3 per cent lower than during the year prior to the 2012 tightening of mortgage requirements. By April, the seasonally adjusted rate of housing starts was down 15 per cent from the 2011/12 average (from 205,000 to 175,000 units).  By mid 2015, CAAMP projects the total drop will be 25 to 30 per cent fewer housing starts, resulting in 150,000 fewer jobs.