TORONTO, ONTARIO — (Marketwire) — 10/23/12 — Editors Note: There is an infographic associated with this press release.
According to the first Housing Confidence Report released today, nearly half of Canadian homeowners (46 per cent) intend to buy a property in the next five years, signalling a high level of confidence in Canada-s housing market. A modest increase in prices, however, would derail plans to buy; meanwhile, three-quarters (72 per cent) of households would feel a significant strain if they were to experience a modest increase in monthly mortgage payments, such as one caused by an increase in interest rates.
The report reflects the sentiment of Canadian homeowners after the new mortgage regulations introduced by the Federal Government came into effect in July 2012.
“The fact that 46 per cent of Canadian homeowners intend to buy a property in the next five years implies that Canadians are feeling confident in the current real estate market environment,” said Martin Nel, Vice President of Lending and Investments, BMO Bank of Montreal. “However, that certainty is tempered, given the adverse effect moderate increases in home prices and mortgage costs would have on the average homeowner.”
“Rising debt and elevated house prices have increased the vulnerability of a meaningful number of households, and their financial situation will worsen if interest rates increase even moderately,” noted Sal Guatieri, Senior Economist, BMO Capital Markets. “With rates likely to remain low for some time, the recent tightening in mortgage rules will help to cool credit growth and the housing market.”
Furthermore, Mr. Nel added that choosing a fixed rate mortgage and a lower amortization period can help Canadian households to increase financial stability. This echoed which noted that financial stability for Canadian homeowners in the coming years will be supported by locking-in to fixed rate mortgages and opting for shortened amortization periods.
BMO-s first semi-annual report, conducted by Pollara, tracks confidence in Canada-s housing market among Canadian homeowners by measuring intentions to buy or sell, price expectations and overall mortgage affordability. The report revealed:
Homeownership Intentions
Effect of New Regulations on Buying Intentions
Price Sensitivity
Price Expectations
“Given that Vancouver is one of the priciest markets in the world, it-s not surprising that many people expect some correction,” said Mr. Guatieri. He added that while prices in Alberta should increase in the years ahead, prices in Vancouver and likely Toronto are poised to decline moderately; the Toronto decrease is contrary to the expectations of the majority of residents in the GTA.
Mortgage Affordability
The BMO Housing Confidence Report was conducted by Pollara. Survey results cited in this report are from online interviews with a random sample of 1,011 Canadian homeowners, 18 years of age and over, conducted between September 13 to September 21, 2012. A probability sample of this size would yield results accurate to +/- 3.1 per cent, 19 times out of 20. Data has been weighted by region, based on the most recent Census figures, so that it is representative of Canadian homeowners.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at July 31, 2012, and more than 46,000 employees, BMO Financial Group provides a broad range of retail banking, wealth management and investment banking products and solutions.
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Contacts:
Media Contacts:
Matt Duffin, Toronto
(416) 867-3996
Valerie Doucet, Montreal
(514) 877-8224
Laurie Grant, Vancouver
(604) 665-7596
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Twitter: @BMOmedia