The housing market may be heating up again, but most Canadians are still waiting on the sidelines for mortgage rates to drop, with some giving up on the idea of buying a home entirely, a recent poll by BMO suggests.
Home prices have started to firm up again and sales increased by 11.3 per cent in April — the largest monthly rise since 2009, BMO said. But the combination of still high prices due to past gains and higher mortgage rates has left affordability near the worst it has been in more than 30 years, it said.
“Amid this challenging and changing market, homebuyers are keeping a keen eye on interest rates,” Hassan Pirnia, head of BMO’s personal lending and home financing products, said in a press release. “Regardless of when buyers are planning their purchase, it’s essential they have a clear understanding of budget and affordability at the start of their homebuying journey.”
The survey, published on June 5, found over two-thirds or 68 per cent of Canadians plan to wait for lower rates before they purchase a home. It said half of Canadians are deferring their home purchases because of their concerns about the economy, while 20 per cent are no longer sure if or when they will buy a home at all.
Meanwhile, it said the majority of Canadians feel buying a home is more out of reach for them compared to their parents. Over 70 per cent of those aged 18 to 24 are most likely to have this outlook, followed by younger millennials (ages 25 to 34) at 69 per cent and older millennials (ages 35 to 44) at 65 per cent.
Among those that think current mortgage rates have affected their decision to move, 18 per cent are holding off as a result of market uncertainty and volatility, the report said.
A different housing poll released by CIBC on the same day found that despite concerns about affordability, Canadians continue to see homeownership as an important goal and a great source of pride.
With the current housing market, however, 66 per cent of current homeowners say they are not looking to move anytime soon and are likely to stay in their home longer than expected, the CIBC report said.
Only 31 per cent of people polled by CIBC say they are in their “forever home,” while 40 per cent say they may consider selling their home when economic conditions stabilize.
Some homeowners expressed regret about the timing of their house purchase, it said, with 37 per cent wishing they had bought their home when mortgage rates were lower and 30 per cent wishing they had sold their home during the recent housing market peak.
The report also said 63 per cent of those surveyed with children at home say they plan to help their kids with a down payment someday, with 79 per cent citing fears about future home affordability for their children.
“Many Canadians recognize that homeownership could be out of reach for their children, unless they have help with a down payment,” said Carissa Lucreziano, vice-president, financial and investment advice at CIBC.