Younger Canadians are expected to lead the way with home buying this year as they take advantage of low interest rates, new jobs and what they consider “good prices,” a bank survey says.
The survey for the Royal Bank suggested that 15 per cent of Canadians between the ages of 18 and 24 were very likely to buy, almost double from eight per cent in 2009. “Our poll found that 35 per cent of younger Canadians, between the ages of 18 and 24, are intending to buy a home due to good real estate prices,” Marcia Moffat, RBC’s head of home equity financing in Toronto. The survey also found 22 per cent in that young age group wanted to buy a home because they considered interest rates were good.
CIBC World Markets senior economist Benjamin Tal said more young people are getting into the real estate market, taking advantage of low interest rates, lower down payments and more years to pay off their mortgages. “Basically parents are begging their kids to buy now because they remember when they were paying 12 to 15 per cent mortgage interest,” Tal said. There is even a greater urgency now that the banks are raising interest rates, July brings the HST and the government will be making it harder for first time home buyers by increasing the minimum down payment for a home to 10% from 5%.
I’m not sure if it is confidence in the real estate market that is causing this to happen or if it a reaction to these new factors that are having young Canadians jumping into the market. If buyers were planning to buy in the next year or two, they may be trying to push up their purchase date to avoid the new down payment laws, the HST hit and the increase in interest rates. By jumping into the market now could save a buyer thousands of dollars down the road.
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