New Mortgage Rules Mark One-Year Anniversary: Changes Have Not Affected Timeline for Two-Thirds of First-Time Buyers-BMO

New Mortgage Rules Mark One-Year Anniversary: Changes Have Not Affected 
Timeline for Two-Thirds of First-Time Buyers-BMO 
- Regional differences: Ontario buyers most likely to stay the
course, those in B.C. will wait longer, while buyers in Prairies and
Quebec to buy sooner  
- BMO Chief Economist says housing market has stabilized following
new rules  
- BMO encourages first-time buyers to stress-test their mortgage to
ensure they can afford housing costs regardless of a rise in interest
rates 
TORONTO, ONTARIO -- (Marketwired) -- 07/08/13 -- With tomorrow's
one-year anniversary marking the most recent changes to mortgage
rules in Canada, a BMO Bank of Montreal report reveals how the new
measures have affected first-time home buyers. 
The rule changes for government-insured mortgages - which went into
effect July 9, 2012 - include reducing the maximum amortization to 25
years from 30 years and lowering the amount of equity that can be
borrowed against a home from 85 per cent to 80 per cent of the
property's value. 
According to the survey, the majority (66 per cent) of first-time
buyers indicate that the recent changes have not affected their
timeline for buying their first home. One-in-five (19 per cent) said
the changes have prompted them to wait longer to buy, while 14 per
cent will buy sooner. 
The report also noted the average amount first-time home buyers plan
to spend is approximately $300,000, with an average down payment
amount of $48,000 (16 per cent). 
Frances Hinojosa, Mortgage Expert, BMO Bank of Montreal noted that
choosing a shorter amortization is the most responsible approach to
home financing. "It's something we have been encouraging our
customers to consider for years, as it means becoming debt-free
sooner." 
According to Doug Porter, Chief Economist, BMO Capital Markets, the
new mortgage rules have helped contribute to a soft landing in the
real estate market. "While Canadian home sales weakened markedly at
the time of the mortgage changes a year ago, they have since
stabilized and have even partially recovered in recent months," said
Mr. Porter. "For instance, Vancouver saw its home sales rise 12 per
cent year over year in June." 
The survey, conducted by Pollara, also revealed the following
regional differences among first-time home buyers across Canada: 


 
--  First-time buyers in Ontario are the most likely (76 per cent) to say
    that the mortgage rule changes will not affect their buying timeline 
--  British Columbians are the most likely (33 per cent) to wait longer to
    buy their first home because of the measures 
--  Those in the Prairies and Quebec are the most likely (19 per cent) to
    say they will buy sooner 
 
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Mortgage rules' effect on buying                                            
 timeline                             NATIONAL   BC  PRAIRIES   ON   QC  ATL
----------------------------------------------------------------------------
Will buy as planned                        66%  60%       58%  76%  62%  64%
----------------------------------------------------------------------------
Will wait longer to buy                    19%  33%       25%  11%  18%  28%
----------------------------------------------------------------------------
Will buy sooner                            14%   7%       19%  13%  19%   7%
----------------------------------------------------------------------------

 
"First-time buyers should stress-test their mortgage to ensure they
are well financially prepared for homeownership and a potential
upswing in interest rates - not only to manage costs, but also to pay
off their mortgage as soon as possible," added Ms. Hinojosa.
"Determining what your mortgage payments and overall costs of home
ownership will look like, and then living in that financial reality
for a year before entering the market, can be an effective strategy." 
Ms. Hinojosa noted that first-time home buyers can get a head start
on planning by getting pre-approved for a mortgage before setting out
to find the perfect home. To learn more, please visit www.bmo.com. 
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
 
 
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