It seems like not a day can go buy without some industry observer proclaiming that the sky is falling in the Canadian real estate market. However, if data from the Bank of Montreal is to be believed, maybe the end times aren't as certain as some may think.
While it's no secret that the housing market has cooled in recent months, the BMO's Housing Confidence Report shows that nearly half of Canadian homeowners (48 percent) intend to purchase a property within the next five years. This number is relatively unchanged from fall 2012, meaning Canadians still have a high level of confidence in the housing market.
Buyer intent fluctuates throughout the country
While the number of Canadians who intend to purchase a property in the near future is high overall, the BMO report shows that there are considerable fluctuations based on region. For instance, the number of individuals intending to buy in Vancouver has risen, while the number of likely buyers dropped in Calgary. When it comes to provinces, Atlantic Canada has experienced the greatest increase in buying intentions, rising 15 points since the fall.
Mortgages seen as more affordable
Perhaps one reason many Canadians intend to purchase a property in the next five years is because low mortgage rates have made them more affordable . Data from the BMO shows that there has been a 10-point drop in the number of current mortgage holders who have to make spending and saving cuts in order to stay current with their mortgage payments.
"The relative strength of the Canadian housing market continues to bolster homeowners confidence, while improving affordability across all regions reflects that Canadians are making responsible choices when it comes to financing a home," said Martin Nel, vice president of lending and investments at the Bank of Montreal.
Strategies to save
Nel went on to say that one way to make homeownership more affordable is by opting for a fixed-rate mortgage. Locking in a low interest rate means homebuyers can depend on the same affordable rate throughout the lifespan of their loan, saving a significant amount on interest.
But how can homebuyers ensure they get the best mortgage rates?
According to a study from the Bank of Canada, using a mortgage broker may be the best way for Canadians to obtain the most affordable finance options.
"Over the full sample, the average impact of a mortgage broker is to reduce rates by 17.5 basis points," the study states. "Brokers are a significant factor, therefore, in driving discounts."