BMO Survey Reveals Majority Delaying Plans
A new survey from the Bank of Montreal (BMO) shows that the majority of Canadian homebuyers say they will push their planning into the next year or longer. They are waiting for interest rates to fall. 72% of people hoping to buy a home wait until borrowing costs drop. This is a 4% increase as compared to last year.
Long Way to Restored Affordability
Although interest rates are expected to be lowered in the second half of 2024, Robert Kavcic, chief economist at BMO Capital Markets, says there is still a long way to go so much so that affordability has recently been restored.
Making Financial Progress, But Facing Anxiety
The report of Ipsos on February 28 and March 18 has states that 85% of respondents say they are actually experiencing financial growth to buy their first home. However, they have financial problems.
Top Concerns for Aspiring Buyers
The biggest concerns for prospective homebuyers are unexpected costs, weather considerations such as wildfires and the high cost of homeownership.
Young Canadians Preparing for Homebuying Journey
BMO’s Hasan Pirnia has stated that despite economic challenges, many young people are interested to stay active on their home-buying journey. They want to enter the real estate market for the first time.
Other Surveys on Housing Affordability
A separate survey conducted by the Canadian Center for Economic Analysis and the Nova Scotia Association of REALTORS found that more than 60% of Nova Scotians believe housing in their area is unaffordable.
Leger and another survey by the Association of Ontario Municipalities found that 76% of Ontarians see affordable housing as a major problem.
Impact of High Interest Rates
Rising interest rates have made it difficult for Canadian homeownership. The Bank of Canada’s overnight rate is currently 4.50%. This was after a series of sharp hikes to address rising inflation.
Government Measures to Address Affordability
The federal government has taken control to tackle affordable housing, including a tax-free first home mortgage and a ban on foreign buyers. But experts say it is necessary many things for to improve in the long run.
Balancing Act for Policy Makers
The country’s policymakers experience a balancing act between improving affordability and avoiding unsustainable demand for housing or inflating household debt levels.
Gradual Rate Cuts Expected
While the Bank of Canada will gradually cut interest rates later this year, it is unlikely to return to the tight borrowing costs seen during the pandemic.
