Buying a home can be stressful, especially for those who are new to the process, but the positives of homebuying and having a mortgage are also clear.
A new survey by Mortgage Professionals Canada which focusing on first-time homebuyers, sounds an optimistic tone overall among 1,991 Canadians aged 23-54 polled in July 2019. Respondents were asked to rank responses on a 10-point scale.
Consumers agree that mortgage debt is good debt, with an average score of 6.99 out of 10 although a similar score was recorded for the view that low interest rates have meant a lot of people have becoming homeowners over the past few years who probably should not have.
Most people say that real estate is a good long-term investment with an average score of 7.16.
There is also positive sentiment about the Canadian economy with an average score of more than 6 in 10 for mildly optimistic; and an average 6.31 out of 10 was recorded for now being a good time to buy a home. This was slightly lower for condos. Price gains are expected for single-family homes and condos.
Stressful stress tests
Asked about stressful decisions, deciding to buy a home comes second behind moving to another city.
Homebuying ranks higher than deciding to get married or to have children.
Asked about the mortgage stress tests, two criticisms emerged. Firstly, that the tests do not account for potential income rises when mortgages are renewed, offsetting the impact of a rate spike.
Secondly, consumers feel that the requirement for a stress test when refinancing with a new lender means they can be trapped with an existing lender. They feel this may lead to them being exploited.
While consumers believe that the tests will ensure that owners can afford their mortgage payments in the future, there is also strong opinion that they may force borrowers to turn to more expensive mortgage options.
“Housing markets across Canada are significantly underperforming given the positive employment numbers and population growth Canada has experienced,” said Will Dunning, MPC’s Chief Economist and author of the report. “Our survey respondents reinforce our belief that Canadians are making sound home purchasing decisions for their economic well-being. As MPC has stated for many months, with many major banks now agreeing, adjustments to current mortgage qualification rules are needed.”
The full survey is available at https://mortgageproscan.ca/docs/default-source/consumer-reports/home-buying-in-2019_mid-year-report.pdf