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Wednesday, September 21st, 2016

Two-thirds of repeat homebuyers will buy again and again

More than two-thirds of repeat homebuyers expect their next house purchase won’t be their last, according to a new survey by TD Canada Trust.

Twenty-three per cent of the more than 1,000 participants — all repeat homebuyers — said they plan to move again within six years. One in five repeat buyers has owned more than five homes.

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All participants had either purchased a home that was not their first home

within the past 24 months, or intend to purchase a home that is not their first home within the next 24 months.

Roughly half of Canadians will hunt for a smaller house, while the rest will look to upsize. Most intend to find a fully-detached home next time around.

As a result, 51% will need to take out a mortgage to finance their next purchase, TD said.

The majority said they plan to save as much as possible to limit the debt burden. Still, 21% said they will take out the maximum mortgage that they qualified for from their bank. This increases to 28% of those under 40.

“I recommend that homebuyers buy the house that fits their budget, not just their lifestyle,” said Farhaneh Haque, a mobile mortgage specialist with TD Canada Trust.

“After all, if you buy a house that is too big for you to afford, you could be giving up that lifestyle just to pay it off.”

Ottawa has already taken steps to tighten mortgage lending rules as interest rates begin to come off historic lows. Finance Minister Jim Flaherty just last week said he would revisit the issue if he sees signs Canadians are getting in over their heads with debt.

Repeat homebuyers should consider taking their mortgage with them when they switch homes for additional savings or use their mortgage as a selling feature if the seller’s rate is lower than the current market rate.

Canada’s housing market, which helped drag the economy out of recession, has been cooling rapidly over the past few months. Economists have said the slight jump in sales recorded in August is likely to prove a blip in a declining trend.

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