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More than seven out of 10 Canadians say their goal is to own a home, CIBC survey finds
The foundation of the Canadian dream, for many, is built on the desire to own a home. While there are challenges that can push this goal further into the future, it often remains a priority.
“Homeownership is a big dream – it’s kind of a rite of passage, isn’t it?” says Carissa Lucreziano, vice-president of financial and investment advice at CIBC. “But it’s also a big undertaking. After all, it’s likely the biggest financial decision you’ll ever make.”
There is a strong cultural value around homeownership in Canada, and while there are current affordability challenges that are causing some to reassess their timelines, there is optimism about new tools and strategies to achieve that goal, and about opportunities in the market.
More than seven out of 10 Canadians say homeownership remains a long-term goal, according to a recent poll by CIBC, and nearly nine in 10 owners take pride in having bought their home.
However, concerns about affordability have some Canadians delaying homeownership. CIBC’s poll found nearly one-quarter of respondents think it would take five years or more to achieve homeownership, or they don’t know how long it will take them to reach this goal.
There’s also great interest – voiced by seven in 10 prospective first-time homebuyers – in the first home savings account (FHSA), a new type of registered account that, like a registered retirement savings plan (RRSP), allows for tax-deductible contributions while withdrawals to purchase a first home would be tax-free.
“Achieving the dream of homeownership takes a mix of strategy, discipline and a little creativity,” says Ms. Lucreziano. “Think about setting up a dedicated savings account, such as an FHSA, for your down payment and contributing to it regularly. And don’t overlook the importance of credit health. A robust credit score can really swing things in your favour when it comes time to secure a mortgage.”
Adding a bit of creativity into a homeownership strategy is something many Canadians are willing to do, according to CIBC’s poll. About 70 per cent of renters and young people still living at home said they’re open to various options that could help them land their first piece of real estate. More than 40 per cent said they would consider buying with a friend or family member or renting out part of the home, and 60 per cent said they’d be willing to pursue homeownership in a less expensive city.
“Whether homeownership is realistic or not also depends on your expectations about where you’ll live, the kind of home you’ll buy, your timelines and what your overall lifestyle will look like,” says Ms. Lucreziano.
It’s a good idea for prospective homebuyers to think ahead to how they’ll finance their real estate purchase, whether that big goal is a just a couple of months out or still a few years away.
About 28 per cent of prospective homeowners are concerned that rising interest rates will make it harder for them to quality for their first mortgage and 25 per cent are worried that their financial situation will worsen after obtaining their first mortgage, CIBC’s poll found.
With those issues in mind, prospective homebuyers are setting a monthly budget, finding ways to cut spending, and putting large purchases on hold in order to reach their homeownership goals. CIBC recommends potential homebuyers try a prequalification tool that can help you determine how much you can borrow.
As interest rates and inflation have risen over the past year, a critical question for many homebuyers and owners today is whether a fixed- or variable-rate mortgage is right for them.
“The choice really comes down to your personal situation and your comfort level with risk,” says Ms. Lucreziano. “A fixed-rate mortgage gives you the peace of mind of consistent payments, while a variable-rate mortgage offers potential savings if rates drop.”
That need for peace of mind has been strong among Canadians lately, with more mortgage holders choosing a fixed-rate mortgage. Recent data from the Canada Mortgage and Housing Corp. (CMHC) show that fixed-rate mortgages with terms from one to three years and three to five years account for increasingly larger shares – about 25 per cent and 35 per cent, respectively – of all new and renewed residential mortgages in the country.
By comparison, variable-rate mortgages now make up less than 20 per cent of new and renewed mortgages, a significant drop from close to 60 per cent in early 2022.
But there’s more to mortgages than their fixed- or variable-rate structures, says Ms. Lucreziano. Homebuyers should also look at extra features, such as an option to make additional payments without penalty.
“These features can help you knock off that mortgage sooner,” she adds. “Flexibility is key.”
Whether you’re in the market for your first home or have bought real estate before, keep in mind that homeownership is one key part of a bigger financial picture, says Ms. Lucreziano.
“Not only is your home a place to hang your hat at the end of the day, it’s also a crucial part of your investment portfolio,” she says. “It’s not just about being able to afford your mortgage payments but also how your home purchase fits into your broader financial goals.”
She urges prospective, new and current homeowners to seek the help of a CIBC financial advisor in their community.
“Our advisors can provide tailored advice to help you figure out what you can afford, how to save for that down payment, and what type of mortgage suits your needs,” says Ms. Lucreziano. “We can help you fine-tune your budget and boost your credit score. We’ll be there every step of the way – from pre-approval to closing – to make your dream of homeownership a reality.”
Advertising feature produced by Globe Content Studio with CIBC. The Globe’s editorial department was not involved.