Home purchase intentions full steam ahead: RBC poll
Vast majority of Canadians view buying a home as a good investment
TORONTO, March 8, 2010 — Homebuying momentum
in Canada continues to gain steam with the portion of Canadians
who are very likely to purchase a home in the next two years
rising to 10 per cent from seven per cent two years ago, according
to the 17th Annual RBC Homeownership Study. Younger Canadians,
aged 18 to 24, will lead the charge this year, with those
very likely to buy almost doubling to 15 per cent from eight
per cent in 2009.
The RBC study conducted by Ipsos Reid found that 91 per cent
of Canadian homeowners believe a home is a good investment,
the highest level in 12 years, and one-quarter (26 per cent)
expect their home to be their primary source of income when
"With the Canadian housing market showing continued
vigour, it's not surprising that Canadians feel more confident
in the long-term value of owning a home," said Robert
Hogue, senior economist, RBC. "Exceptionally low mortgage
rates and improved affordability have been key reasons for
the resurgence in the housing market this past year."
Most Canadians who intend to buy a new home in the next two
years are planning to take a fixed rate mortgage (44 per cent).
However, combination mortgages had the highest increase in
popularity this year, with 40 per cent intending to take both
a variable and fixed rate component, up from 32 per cent last
For Canadians planning to take a fixed rate or combination
mortgage, seven-in-10 intend to take a term of five years
or longer. Sixteen per cent said they intend to take a variable
rate mortgage, down from 20 per cent in 2009.
"Canadians seem to be opting for more caution this year
and may be factoring in potential rate increases down the
road," said Marcia Moffat, RBC's head of home equity
financing. "Choosing a combination mortgage can take
some of the guesswork out of making a decision between whether
it is better to lock in to a longer-term or stay in a variable
In the wake of the recent housing rebound, most Canadians
(six-in-10) also believe housing prices will rise in 2010,
up significantly from 25 per cent in 2009. Similarly, a majority
(64 per cent) believe mortgage rates will be higher over the
next year, also up from 33 per cent a year ago.
"The expectation of higher mortgage rates on the horizon
could be motivating buying intentions this year. But it's
important that homeowners - especially first time buyers -
get solid advice about what they can afford, not only today,
but down the road," added Moffat.
In addition to seeking customized advice from a financial
advisor, Moffat provides the following tips:
1. Lock in your rate when you apply for your mortgage.
Depending on your situation, there are rate guarantees that
allow you to lock in your mortgage rate for up to 120 days.
2. "Stress test" your mortgage for rate increases.
If you are concerned about affordability down the road, knowing
what your payments would be with a one - three per cent rate
increase will give you greater peace of mind that your new
home is affordable both today and in a few years time, when
rates might be higher.
3. For first time homebuyers, leave some wiggle room.
With a pre-approved mortgage you will know what you can afford
today. But before making a decision to find a home at the
top of your pre-approval amount, also consider your current
lifestyle preferences and how future changes in your circumstances
could impact your payment comfort zone.
For homeowners renewing their mortgage:
1. Take advantage of early renewal options.
Some mortgages allow you to renew up to 120 days before the
end of your term. This means you can lock in your new mortgage
2. Consider a combination (hybrid) mortgage to manage
your interest costs.
If you are unsure of where rates are headed, consider splitting
your mortgage into part fixed and part variable. You will
have rate protection on the fixed rate mortgage portion, while
you benefit from today's low interest rates on the variable
rate mortgage portion.
Canadians can visit the new RBC Advice Centre www.rbcadvicecentre.com
to stress test their mortgage for potential rate increases.
The RBC Advice Centre is an online resource that gives Canadians
access to advice about all aspects of their finances including
their homeownership goals - whether they are buying their
first home, planning their next move, renovating or managing
their current home financing. Advice videos are updated regularly
to reflect current housing trends and to answer the questions
that are top of mind with Canadian homeowners. Interactive
tools and calculators provide customized information covering
all facets of homeownership. With the guidance of RBC mortgage
specialists, Canadians have access to free, no-obligation
professional advice and personalized one-on-one service about
RBC mortgage products and services.
RBC is the largest residential mortgage lender in Canada.
As the country's number one source of financial advice on
homeownership, RBC conducts consumer surveys as one way to
provide insight to Canadians about the marketplace in which
they live. These are some of the findings of the RBC's 17th
Annual Homeownership poll conducted by Ipsos Reid between
January 8 to 13, 2010. The annual online survey tracks Canadians
attitudes and behaviours around homebuying and home ownership.
It is based on a randomly selected representative sample of
2,047 adult Canadians that was statistically weighted by region,
age and sex composition according to the 2006 Census data.
The results are considered accurate to within ±2.2
19 times out of 20, of what they would have been had the entire
adult Canadian population been polled. The margin of error
will be larger within regions and for other sub-groupings
of the survey population.
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Jacqui van der Jagt, RBC, (416) 974-1756
Matt Gierasimczuk, Media Relations, (416) 974-2124