46 per cent of younger homeowners say mortgage costs eat up too much
TORONTO, April 7 /CNW/ - Over half of young Canadians (55 per cent)
believe that it makes sense to delay a home purchase until next year,
10 points higher than the national average, and almost half (46 per
cent) of younger homeowners admit that their mortgage is using up too
much of their income, according to the 18th Annual RBC Homeownership Study.
"In a more balanced housing market, it makes sense that younger and
first time homebuyers are waiting to assess all of their options and do
their research before buying a home," said Bernice Dunsby, director of
Client Acquisition, Home Equity, RBC. "It's also important to get
expert advice on what you can afford and leave yourself with a little
extra wiggle room in your budget so you don't become house poor, as
home maintenance and lifestyle costs can add up."
The poll found that younger Canadians are more likely to purchase a home
than other age groups, as 43 per cent (aged 18-34) are looking to buy
in the next two years, compared to the national average of 29 per cent.
Older Canadians are much less likely to buy in the next two years,
including those aged 35-54 (29 per cent) and over-55 (17 per cent).
When looking for advice on purchasing a home, younger homebuyers (aged
18-34) are more likely to use real estate websites (55 per cent) or
family (48 per cent) and friends (35 per cent). The majority of older
Canadians, aged 45-54 and over-55, are more likely to rely on a real
estate agent as their choice for advice, at 71 per cent and 74 per cent
respectively. "Being prepared and working with a mortgage specialist
will help you buy with confidence and give you expert advice on current
financing options," added Dunsby. "Having a mortgage pre-approval is a
critical component of buying a home, particularly for younger
homebuyers. It presents you as a serious purchaser to both realtors and
According to the poll, younger Canadians (aged 18-34) are most concerned
about having a good down payment (23 per cent) and rising real estate prices (23 per cent) when looking
to buy a home. Canadians aged 35-54 are most concerned with rising
prices, as 24 per cent are worried about mortgage rates and 25 per cent about home prices increasing. Canadians over the age of
55 list increasing home prices (36 per cent) as their biggest worry
when deciding to purchase a home.
While 43 per cent of younger Canadians (aged 18-34) are paying off their
mortgage faster than they expected, two-thirds (66 per cent) say it is larger
than they would like it to be.
Dunsby outlines five tips for younger Canadians looking to buy a home:
Leave some wiggle room: Line up your paycheque and compare it to your total costs. Make sure
that you have enough left over for new furniture, repairs and costs of
living. Do a spending analysis to see what the total costs of homeownership would be relative to your
lifestyle and build that into your plan (i.e. if you enjoy eating out
or going to the gym).
The power of the pre-approval and stress test: Make sure you have your financing in order before you start your search
- it will show sellers and real estate agents that you're serious. Mortgage pre-approvals have no obligation and help lock in your interest rate. Work with a
professional mortgage specialist to test your mortgage for potential mortgage rate and cost increases to
make sure you can handle it.
Don't overbuy: Be realistic in choosing a home that's within your means and make
concessions on what you're looking for. Set aside a budget for ongoing
home maintenance and potential cost increases (for utilities, taxes and
fees). Online tools and calculators can help you plan your budget.
Look at payment flexibility: Look at a mortgage that provides you with the option of doubling up
your mortgage payment or putting down a lump sum payment once a year.
Doubling up your mortgage payment just once per year can save you tens
of thousands in interest costs and take years off your mortgage
Don't forget closing costs: Closing costs are typically one to two per cent of your final purchase price. Build
this into your budget along with the cost of new appliances, utility
and cable hookup and moving costs.
What types of homes are Canadians looking to buy? (according to the 18th Annual RBC Homeownership Poll):
Younger Canadians (ages 18-34)
Detached house 59 per cent
Condo/loft 15 per cent
Semi detached house 10 per cent
Townhouse 10 per cent
Mid-range Canadians (ages 35-54)
Detached house 71 per cent
Condo/loft 10 per cent
Semi detached house eight per cent
Townhouse seven per cent
Older Canadians (55 and older)
Detached house 68 per cent
Condo/loft 15 per cent
Semi detached house five per cent
Townhouse five per cent
More First Time Homebuyers choose RBC Royal Bank than any other bank.
Canadians can visit the RBC Advice Centre for advice on the costs associated with purchasing a home. 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
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 18th Annual Homeownership poll conducted by Ipsos Reid between January 12 to17, 2011. The annual
online survey tracks Canadians attitudes and behaviours around
homebuying and homeownership. The results are based on a sample where
quota sampling and weighting are employed to balance demographics and
ensure that the sample's composition reflects that of the actual
Canadian population according to Census data. Quota samples with
weighting from the Ipsos online panel provide results that are intended
to approximate a probability sample. An unweighted probability sample
of 2,103 adult Canadians, with 100 per cent response rate would have an
estimated margin of error of ±2 percentage points, 19 times out of 20.
The margin of error will be larger within regions and for other
sub-groupings of the survey population.
For further information:
Matt Gierasimczuk, RBC Communications, (416) 974-2124
Elyse Lalonde, RBC Media Relations, (416) 974-8810