COVID shaking up buyer expectations and location
BMO, today, has issued the first in a series of releases on the Canadian housing market. According to the survey, while COVID is affecting the experience and expectations for first-time homebuyers, many continue to have a positive short-term outlook on the housing market.
The survey, conducted by Pollara Strategic Insights, found:
- On average, first-time homebuyers are looking to spend roughly $432,000 on their first home and more than 40 per cent indicate that now is a good time to buy. Buyers in Alberta and the Prairies are the most optimistic about their housing markets with 60 per cent feeling that it is a good time to purchase a home. The most pessimistic buyers are in Ontario and British Columbia, with only 33 per cent of first-time buyers showing optimism about their markets.
- However, COVID-19 has shaken up where and what type of home is going to be purchased. Twenty nine per cent of first-time homebuyers are changing their search from a major city to the suburbs or a rural area. As well, with working from home becoming more prevalent, a quarter of prospective buyers are moving their search away from a condo or townhome to a detached home.
- The size of the mortgage first-time buyers are looking to take has also been influenced by COVID. About half of buyers have had to tap into their down payments to help cover unexpected costs over the last several months. As well, a quarter of first-time homebuyers have said that they will have to take a larger mortgage. Regionally, buyers in Ontario and B.C. are more the most likely to opt for larger mortgages (30 and 26 per cent, respectively).
“Even with a global pandemic as our backdrop, we’re encouraged to see Canadians maintaining their optimism on our housing market,” said Hassan Pirnia, Head, Personal Lending and Home Financing Products, BMO Bank of Montreal. “While many buyers are viewing the market favourably, households are facing stronger headwinds than they have in the recent past. As buyers look to enter the market, we should expect to see a continued trend where they are exploring different financial options to help with the purchase. On our side, we continue to be focused on finding ways to help simplify the home buying journey – including offering the longest pre-approval time – so that first-time buyers can make the decision that is best for their situation when they are ready.”
Especially during periods of uncertainty, having the time for due diligence on the home purchasing journey is important. Of those surveyed, 19 per cent of prospective buyers indicted that they are already pre-approved for a mortgage and half are planning on obtaining pre-approval.
To provide first-time homebuyers additional peace of mind on their housing journey, BMO has introduced a new digital solution that allows them to apply for mortgage pre-approval online and receive a decision in real time. As well, the bank offers the longest rate guarantee period at 130 days.
For more information on mortgage options and affordability tools or to be pre-approved online, visit: https://www.bmo.com/main/personal/mortgages/.
The BMO First-Time Home buyers Survey was conducted by Pollara Strategic Insights via an online survey between August 25 and August 31, 2020, with an online sample of 801 adult Canadians. The margin of error for a probability sample size of 801 ± 3.5% is 19 times out of 20.
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8th largest bank, by assets, in North America. With total assets of $974 billion as of July 31, 2020, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.
SOURCE BMO Financial Group