How Does A Construction Mortgage Work?
Inspired! Young Canadians Now More Interested In Buying Home Than Pre-Pandemic
There may be uncertainty in the future for our country’s real estate market, but young Canadians are undeterred and remain optimistic about the prospect of buying a home.
Nearly 1 in 5 Canadians aged 18-34 say the pandemic has accelerated their plans to purchase a home or investment property, according to a recent Scotiabank survey.
The recent lockdowns on those confined to smaller living spaces and wanting to upgrade to a larger or more functional living space has played a big role in the decision-making.
“The pandemic has caused many Canadians to turn their living rooms into classrooms, their dining rooms into offices, and their basements into home gyms,” said a real estate professional. “This is motivating many to consider investing more in their current homes or re-evaluating their living spaces altogether.”
But, historically low interest rates seem to be the key driver behind this homebuying optimism. Despite soaring home prices, falling interest rates have helped keep homes within reach for many buyers.
Based on the average mortgage size of $289,000, according to Equifax Canada, today’s homebuyers could save more than $13,000 due to the recent plunge in interest rates compared to if they had purchased back in January.
That’s based on a nationally available uninsured 5-year fixed mortgage rate of 1.84% today vs. 2.84% at the start of this year. That works out to $142 in monthly mortgage savings, or $13,532 over the five-year term.
Even if today’s mortgage amount was increased to $299,000, those buying now would still come out ahead by $2,689 over the 5-year term with today’s lower rates.
Not only are prospective buyers counting on historically low interest rates, many believe home prices are set to fall as well.
1/3 of those who say the pandemic has accelerated their homebuying plans say they are waiting for prices to drop before making a purchase.
The survey found the younger the demographic, the more likely they are to expect a forthcoming drop in house prices:
- 25% of overall respondents expect a drop in home prices, vs.
- 36% of those 18-34
- 24% of those 35-54
- 17% of those 55 and older
The Scotiabank survey also found the following tidbits:
- 1 in 5 Canadians (20%) have had their finances negatively impacted by the pandemic and have had to put their homebuying plans on hold.
- 77% of renters say they have no plans to purchase a home in the next two years, despite low interest rates.
- A recent Mortgage Professionals Canada survey made a similar finding, that 23% of renters expect to buy a home in the next two years.
- 12% of homeowners are planning to use the equity in the home to finance a renovation
- 20% plan to use a personal line of credit
- 22% to use funds from their investments
- 3% plan to borrow from family or friends
Related posts
