Nearly three-quarters (72%) of potential Canadian homebuyers are waiting until interest rates drop before purchasing a home, according to the latest BMO Real Financial Progress Index report. This is a 4% increase from 2023.
The new report also found 85% of Canadians believed they are making real financial progress and over two-thirds (67%) feel confident in their financial situation. However, fear of unknown expenses (84%) and concerns about their overall financial situation (81%) and housing costs (74%) were among the leading sources of financial anxiety.
Furthermore, 62% of Canadians believed owning a home is one of their biggest aspirations in life, but 56% of aspiring homeowners felt homeownership is unattainable. Among the 39% of aspiring homeowners planning on purchasing a home in the near future, only 13% planned to in 2024 and more than one-quarter (26%) planned on doing so in 2025 or later.
There are other factor weighing on prospective buyers – 39% of Canadians said climate-related factors such as wildfires, floods, heatwaves, and storms will affect where they choose to live in the next five years, while 41% said rising home insurance costs may affect their ability to maintain or buy a home.
As for homeowners, nearly three quarters (74%) who planned to refinance their home said they will wait until mortgage rates drop before refinancing.
“Demographic forces have allowed some pent-up demand to build, and market psychology is such that many are expecting rate cuts in the second half of the year,” said Robert Kavcic, senior economist at BMO Capital Markets. “This should pull some demand off the sideline and firm up housing activity, but rates have a long way to fall still before affordability is restored to recent norms.”
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