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Published: April 30, 2024
About three-quarters of Canadians looking to buy a home say they have postponed their plans until next year or later in hopes of lower interest rates, according to a new opinion poll.
In a study conducted for the “Bank of Montreal” (BMO), one of Canada's largest banks, 72% of respondents hoping to buy a home said they will wait for borrowing costs to decrease. This represents an increase of 4 percentage points compared to a similar study conducted a year ago.
It is widely expected that the Bank of Canada (the central bank) will begin reducing its key interest rate in the second half of this year.
Robert Kavcic, the chief economist at BMO's financial markets branch, said that a decrease in interest rates would help stimulate activity in the housing market.
“But there is still a long way for interest rates to fall before affordability returns to its previous standards,” Kavcic said in a statement today.
The BMO survey indicated that other financial concerns, such as inflation and the rising cost of living, are also preventing many from purchasing homes this year.
The survey included 2,500 participants and was conducted by Ipsos, a specialist firm in this field, from February 28 to March 18.
While 62% of respondents consider homeownership to be one of their biggest life aspirations, more than half believe it is out of reach given the current financial pressures and economic conditions.
85% of respondents said they are making real financial progress toward buying their first home, but they are facing financial anxiety.
Among their main sources of concern are unexpected expenses, climate considerations like wildfires, and the rising costs of homeownership.
Hassan Birnia, head of personal lending and home financing at BMO, said that despite economic challenges and market hurdles, many young Canadians are preparing to embark on the journey of home buying and enter the real estate market for the first time.
It is worth noting that the Bank of Canada announced on April 10 that it is keeping the key interest rate at 5%, for the sixth consecutive time.
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