BMO Surveys First-Time Homebuyers
By Lucas on Apr 09, 2013
The average first-time homebuyer expects to purchase a $300,000 home with a $48,000 down payment, so says a recent BMO first-time homebuyer survey. The survey, released Tuesday, gave us a peek into the mindset of some of the most important buyers in the industry, the first-timers.
Conducted by Pollara, the survey sampled Canadians 18 years of age and over, and asked them questions about their home ownership plans, their thoughts on the new mortgage rules, as well as how they plan on achieving their goals of homeownership.
The report revealed that on average, first-time homebuyers expect to be mortgage free in 20 years, with 20 percent feeling as though it should take between 10 and 19 years to pay down their mortgage. The findings show that not only are first-time buyers educated, they are also prepared.
"Buying a home is one of the most important financial decisions one can make. It's crucial that those planning to enter the market are well prepared - not only to manage their costs, but also to pay off their mortgage as soon as possible," said Laura Parsons, Mortgage Expert at BMO Bank of Montreal. "Determining what your mortgage payments and overall costs of homeownership will look like, and then living in that financial reality for a year before entering the market, can be an effective strategy."
Another interesting aspect of the report is the fact that recent mortgage changes haven’t really affected first-timers’ interest in purchasing a home. Of those surveyed, 66 percent say that the latest changes to the mortgage rules (which include lowering the amortization periods for government insured mortgages) have not affected their plans, while 19 percent reported that they will now wait a little longer before buying as a result of the changes.
"A shorter amortization is the most responsible approach to home financing; it's something BMO has been encouraging their customers to consider for years, as it means becoming debt-free sooner," noted Parsons.
59 percent of those surveyed noted that they have had to push back their home buying plans due to increasing home prices, and that same 59 percent wish that they had bought their first home five years ago.
The message is clear. First-time homebuyers continue to be confident in the real estate market, however affordability is a big obstacle, and will continue to be the biggest moving forward.
