Recent reports from two of Canada’s major banks – CIBC and ScotiaBank –
offer a glimpse into the world of millennials and home ownership as
well as the impact of the Internet on mortgage hunting. Bottom-line:
Nearly two-thirds of millennials plan to own a home in the next five
years, but don’t have the money for a down payment yet. Ninety-six per
cent of Canadians rely on the Internet for information but 70% of those still rely on advisors for mortgage advice.
Among Canadians aged 18-24, two thirds (64%) of them plan to make the move to home ownership, with 63% looking to buy in the next five years, but nearly half (44% )
say they have not started to save. The down payment is the biggest
obstacle; however, rising prices is seen as having an impact on their
ability to buy.
A majority (56%) of Canadians are sympathetic and say something
should be done to help the younger generation enter the housing market.
Seventy-seven per cent believe that buying a home is more difficult for
young Canadians today than it was for previous generations.
Here are the key findings from the CIBC poll about millennials and home ownership:
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64 % of Canadians aged 18–34 say that their future plans include buying a home. Among them: 63% plan to do so within the next five years, and 44% have not started to save yet for their down payment.
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54 % of millennials planning to buy a home say that saving
enough for the required down payment is the biggest obstacle to home
ownership. Other roadblocks include: Job security and earning enough to
afford mortgage payments (53%) and rising real estate prices (46%).
- 56 % of Canadians say something should be done to help young Canadians get into the housing market.
- 77 % of Canadians say buying a home today is more difficult for young Canadians than it was for previous generations.
So what does this mean for mortgage brokers and consumers? It’s actually
good news for consumers. As competition increases, mortgage products
may become more tailored with more options available. Competition is a
good thing because it gives you choice. Brokers can help facilitate that
choice.
With historically low interest rates, it’s easy to shop the market to
find a low advertised rate, whether from your local bank or from your
mortgage broker. However, mortgages are not as simple as some make them
out to be, especially when rate is all that is considered.
It’s important that home buyers educate themselves about mortgages
including the following areas: pre-payment terms, penalties, fixed vs.
variable, open vs. closed, etc. Each situation is as unique as each
borrower and each needs a unique strategy.
Again, the sheer volume of information online can be overwhelming.While getting informed through Internet research is a good thing, once
armed with that information, it’s still important to work with a
licensed mortgage professional who will ask the right questions to
tailor a custom-fit mortgage that works for short and long term goals.