Mortgage rule changes and increasing interest rates—surprisingly—weren’t the top motivators for prospective homebuyers in 2017, according to a new survey from the Canada Mortgage and Housing Corporation (CMHC).
Instead, the 2018 Prospective Home Buyers Survey found that improved accessibility (i.e., fewer physical obstacles and barriers) and investment opportunity were the main driving factors to purchase a home.
The results were divided into three segments of buyers: first-time buyers, previous owners (who had previously owned a home but do not currently) and current owners.
For first-time buyers and previous owners, the desire to stop renting was ranked as one of the top three motivators to buy a home by 65% and 60%, respectively.
“The majority of prospective home buyers from all groups agree that home ownership is a good long-term financial investment,” the survey noted.
This is the first time CMHC has conducted this specific study, which examined attitudes and expectations of prospective Canadian homebuyers, as well as their understanding of the homebuying process.
There was also some positive news for brokers, as the survey confirmed that a majority of buyers from all three groups—including a full 80% of first-time buyers—planned to consult a mortgage broker before making their home purchase.
Here are some of those findings (with key stats in blue):
Mortgage Rule Changes, Home Prices & Rising Interest Rates
- 36% of first-time buyers were aware of the 2016 mortgage qualification rule changes(e.g., the 10% down payment required for the home price portion above $500,000 and the requirement for all insured mortgages to be stress-tested using the 5-year posted rate).
- 53% of previous owners and 58% of current owners were aware.
(Ed. note: On average, a minority of prospective homebuyers were aware of key mortgage rule changes. This helps make the case for the value a mortgage broker can bring in terms of increasing buyer awareness and helping them navigate sometimes complicated and unknown mortgage regulations.)
- 20% of first-time buyers not previously aware of the rule changes said it will impact their purchase decision in some way.
- Vs. 18% of previous owners and 14% of current owners.
- 50% of first-time buyers said the changes would cause them to delay their home purchase, while 23% would purchase a smaller home.
- 51% of previous owners and 65% of current owners would delay their purchase
- 35% of previous owners and 32% of current owners would purchase a smaller home
- 76% of first-time buyers said they are likely to delay their home purchase due to high home prices, followed by 73% of previous owners and 63% of current owners.
- 70% of first-time homebuyers said they are concerned about the possibility of interest rates increasing before they buy their home, followed by 62% of previous owners and 61% of current owners.
- 61% of first-time buyers would, as a result, likely delay their home purchase, followed by 61% of previous owners and 50% of current owners.