For many Ontarians, the rate pain has gotten so fierce that they’re putting off their homebuying plans indefinitely.
Data from a new RATESDOTCA survey shows that today’s interest rate realities have impacted the decision to move, upsize, downsize, or buy for 48% of Ontarians. Seventeen percent say higher rates have prompted them to delay their purchasing plans specifically.
The mortgage comparison platform also reveals that many Ontarians have negative sentiments on homeownership in general, with 17% saying that they believed homeownership to be a “good investment” before the onset of high mortgage rates, but don’t believe so anymore, and 4% saying that they flat-out “regret” buying their homes altogether.
“What the data lays bare is that more people are deeply reconsidering the use and benefit of this particular life milestone,” writes Jessica Wei, Senior Editor for RATESDOTCA.
Thursday’s report draws attention to the fact that millennials — adults between the ages of 27 and 42 — are in a particularly “tough position,” with around 13% saying they have put off plans to move into a larger house.
The obvious culprit here is interest rates, which have made it “harder than ever” to qualify for a mortgage, explains Wei. “Currently, the CMHC mortgage stress test still requires borrowers to meet the income levels needed to afford 2% above the rate negotiated with the lender.”
Interest and mortgage rates, combined with inflationary pressures, mean that some millennials are giving up on homeownership completely, with 10% saying that they never plan to own a home, and 4% saying their home-buying plans are on hold while rates stay high.
The report adds that though baby boomers are, typically, in a better financial position than their younger counterparts, they are more likely to be supporting their adult-age children these days. For around 5% of boomers, this has meant delaying plans to downsize.
“Downsizing has been a traditional money-saving move to keep older homeowners comfortable through their golden years,” notes Wei. “However, selling off the family home might not be as tempting, now that the mortgage rate you might be paying on your next home will likely put a damper on much of your potential gain.”