Canadians saving up to buy their first home are optimistic about a new incentive introduced in the federal budget, according to a poll commissioned by Bank of Montreal.
In March, the Liberals introduced a first-time homebuyer incentive that allows residents who have the minimum down payment for an insured mortgage to apply for a shared equity mortgage with the Canada Mortgage and Housing Corporation. The program became available on Monday.
The BMO poll found that first-time homebuyers were enthusiastic about the new incentive, with 86% of respondents saying it would help them achieve their home ownership goals.
To be eligible for the incentive, first-time buyers must have an annual household income of less than $120,000. The plan applies to mortgages of no more than $480,000, and covers 5% of the mortgage for existing homes and 10% for new homes.
Almost half (45%) of respondents to BMO’s poll said they were looking to purchase a home in Vancouver, Toronto or Montreal. To qualify for the incentive in one of those markets, they would need to have a down payment large enough to leave the mortgage on the home at no more than $480,000. (July’s composite MLS home price index for Greater Vancouver, for example, was almost $1 million.)
Saving could be a problem for some: 26% of respondents said it would be a “major challenge” to save enough for a 5% down payment on a home, and 39% said it would be a “minor challenge.”
Fourteen per cent of respondents were already in a position to make a down payment, while 55% believed they would be ready in the next two years.
The poll also found that 40% of respondents were willing to make sacrifices in other areas of their lives to buy a more expensive home. Only 13% said they planned to have a monthly mortgage payment that exceeds 30% of their income.
First-time buyers in Alberta were the most optimistic about thinking now is a good time to buy (50%), followed by British Columbia and the Prairies (tied at 42%). Less than 40% of prospective buyers in Quebec — and only one-third in Ontario — thought now is the time to buy.
The BMO poll was conducted by Pollara Strategic Insights via an online survey of 805 adult Canadians between Aug. 15 and Aug. 19, 2019. Online surveys cannot be assigned a margin of error because they do not randomly sample the population. The survey results were weighted using census information to be representative in terms of gender and region.