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First-time homebuyers consider Atlantic Canada the most affordable: BMO report

A growing number of young Canadians are living at home until they can afford a downpayment on a home (Getty)

A new Bank of Montreal report has found that nearly half of first-time homebuyers in Canada think they can afford a home – as long as they get a helping hand.

The report, which surveyed 801 homebuyers looking to purchase a home in the next year, also found that more than a quarter of Canadians surveyed are looking for a gift between $5,000 and $50,000. More than 10 per cent need $100,000 or more.

Millennials reported needing the most financial help, looking for $61,431, while Gen-Xers need $43,400.

The report also found fewer millennials are leaving the nest. Instead, they are living rent-free with their parents while saving up for a downpayment.

“Up against external headwinds, parents and family members are being asked to help first-time buyers enter the real estate market,’ said Hassan Pirnia, head of personal lending and home financing products at BMO, in a statement.

“While a financial gift can help, a home financing solution that fits a homebuyer’s budget is equally important.”

In Atlantic Canada, 62 per cent of first-time homebuyers are likely to consider the market affordable. They also expect to pay the lowest average price at $326,700.

On the other end of the spectrum, just 32 per cent of Ontario buyers think the market is affordable and plan to spend at least $443,705. British Columbia is considered the least affordable province, with buyers anticipating a price tag of at least $445,294.

BMO has labeled six out of 11 of Canada’s larger cities as buyer’s markets: Calgary, Edmonton, Saskatoon, Regina, Vancouver, and Victoria.

The report also found a third of respondents need to buy a home with someone else in order to afford it.

When it comes to mortgages, 55 per cent of first-time buyers would choose a fixed-rate mortgage due to rising interest rates, while 24 per cent say they would choose a variable rate mortgage.

“While not every Canadian sees the market as affordable, it’s clear that home ownership is still the goal,” said Pirnia.

“We generally expect that Canadians will get a bit of reprieve from rising rates, so the market for first-time buyers is more favourable.”

The Bank of Canada makes its next interest rate decision on Wednesday.

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitte@jessysbains

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