REPEAT-BMO First-Time Home Buyer's Report: One-Third Expect Interest Rates to Remain the Same Over the Next Five Years

REPEAT-BMO First-Time Home Buyer's Report: One-Third Expect Interest Rates to 
Remain the Same Over the Next Five Years 
- Majority of first-timers are taking steps to stress-test their
mortgage 
- According to BMO Economics, rate hikes expected to start in the
second half of 2014 
- Three-quarters plan to "stress-test" their first mortgage against a
higher interest rate 
TORONTO, ONTARIO -- (Marketwired) -- 07/04/13 -- According to BMO's
First-Time Home Buyer's Report, one-third of first-time buyers (31
per cent) expect interest rates to stay the same over the next five
years.  
However, these first-time buyers may need to reconsider their
outlook. BMO Economics projects the Bank of Canada will raise its
overnight lending rate in the second half of 2014.  
"The Bank of Canada has made no changes to its policy bias," said
Doug Porter, Chief Economist, BMO Capital Markets. "With Canadians'
debt-to-income ratio poised to stabilize in the months ahead and the
housing sector cooling, we continue to look for a rate hike during
the second half of 2014. Even so, other interest rates, such as
longer-term mortgage rates, can rise well ahead of the Bank of
Canada."  
Frances Hinojosa, Mortgage Expert, BMO Bank of Montreal, noted that
the current projections indicate the cost of borrowing to own a home
will gradually increase, and buyers should take note when planning
their purchase. "It remains vital for Canadians - particularly
homeowners - to be prepared for the inevitable rise in interest
rates."  
Those living in Ontario are the most likely (34 per cent) to expect
interest rates to stay steady over the next five years, whereas those
in the Prairies are the least likely (27 per cent). 


 
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                                  NATIONAL    BC  PRAIRES    ON    QC   ATL 
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Expect rates to stay the same           31%   28%      27%   34%   32%   29%
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Stress-Test 
The report also showed that, while the timing of the rise in rates
may be different, Canadians are taking the right steps - 76 per cent
plan to "stress-test" their mortgage against a higher interest rate
to ensure they can afford their home over the long term. Ontarians
are the most likely (80 per cent) to stress-test their mortgage,
while Atlantic Canadians are the least likely (62 per cent). 


 
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                                  NATIONAL    BC  PRAIRES    ON    QC   ATL 
----------------------------------------------------------------------------
Plan to stress-test mortgage            76%   75%      70%   80%   77%   62%
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"For both first-time and repeat buyers, it's essential to stress-test
their mortgage against a higher interest rate to ensure they can
manage a rise in costs as a result of any potential increases in
interest rates down the road," added Ms. Hinojosa. "It's also wise to
choose a mortgage with a shorter amortization, which can help
homeowners become mortgage-free sooner." 
Other key findings include: 


 
--  One-in-three (32 per cent) first-time buyers are unsure how long they
    will live in their first house 
--  Two-in-three (68 per cent) consider their first home to be only a
    "starter home" 
--  Six-in-ten (63 per cent) have made cutbacks to their lifestyle to save
    for their first home, while one-in-four (27 per cent) expect their
    parents or other family members to help them pay for their first home 

 
Ms. Hinojosa added that those who are ready to enter the marketplace
can get a head start on planning by getting pre-approved for a
mortgage before setting out to lock down the perfect home. 
For those looking to buy a home, try BMO's Mortgage Calculator to
complete an affordability assessment and determine how much you can
realistically afford:
http://www.bmo.com/calculators/hmcia/index.jsp?lang=en. 
The BMO First-Time Home Buyers Report was conducted by Pollara.
Survey results cited in this report are from online interviews with a
random sample of 2,000 Canadians 18 years of age and over, conducted
between February 25 and March 5, 2013. As a guideline, a probability
sample of this size would yield results accurate to +/- 2.2 per cent,
19 times out of 20. Data has been weighted by region, gender, and
age, based on the most recent Census figures, so that it is
representative of all adult Canadians.  
About BMO Financial Group  
Established in 1817 as Bank of Montreal, BMO Financial Group is a
highly diversified North American financial services organization.
With total assets of $555 billion as at April 30, 2013, and more than
46,000 employees, BMO Financial Group provides a broad range of
retail banking, wealth management and investment banking products and
solutions. 
Contacts:
Media Contacts:
Jessica Park, Toronto
(416) 867-3996
jessica.park@bmo.com 
Valerie Doucet, Montreal
(514) 877-8224
valerie.doucet@bmo.com 
Laurie Grant, Vancouver
(604) 665-7596
laurie.grant@bmo.com 
Internet: www.bmo.com
Twitter: @BMOmedia