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Saturday, October 7th, 2023

BMO Home Buying Report: First-Time Buyers Expect to Spend $300,000 on First Home with an Average Down Payment of $48,000

– On average, first-time buyers expect it will take them 20 years to pay off their mortgage

– Report shows first-timers prefer a fixed rate to a variable rate mortgage by more than a 2:1 ratio

– Report reveals how recent changes to Canadian mortgage rules have affected the timeline to buy for first-time buyer

Adil Virani Vancouver Mortgage BrokerTORONTO, ONTARIO–(Marketwired – April 9, 2013) – According to the BMO First-Time Home Buyer’s Report, the average amount Canadians planning to buy their first home in the next five years plan to spend is approximately $300,000, with an average down payment amount of $48,000 (16 per cent).

The report also revealed:

  • On average, first-time home buyers expect to be mortgage free in 20 years, with 20 per cent estimating it will take between 10-19 years
  • Those planning to enter the real estate market for the first time are twice as likely to choose a fixed rate over a variable rate mortgage (46 per cent versus 20 per cent)
  • Furthermore, first-timers who expect interest rates to stay the same or decrease over the next five years still prefer fixed rate over variable rate mortgages (39 per cent versus 23 per cent)

Buying a home is one of the most important financial decisions one can make. It’s crucial that those planning to enter the market are well prepared – not only to manage their costs, but also to pay off their mortgage as soon as possible,” said Laura Parsons, Mortgage Expert, BMO Bank of Montreal. “Determining what your mortgage payments and overall costs of home ownership will look like, and then living in that financial reality for a year before entering the market, can be an effective strategy.”

Ms. Parsons added that it is encouraging to see that buyers say they are in a position to pay down their mortgage in 20 years or fewer. “Homebuyers can shorten that timeline further by choosing a shorter amortization and taking advantage of accelerated payment options.”

Average Spend on First Home   Average House Price by Province *
  NS   NB   NFLD   QC   ON   MB   SK   AB   BC
$300,000   $211,772   $156,119   $295,588   $271,912   $392,962   $259,397   $280,915   $378,685   $529,922

First-Time Buyers and New Mortgage Regulations

According to the report, two-thirds of first-time buyers (66 per cent) say the latest changes to mortgage regulations – which included reducing the maximum amortization for government-insured mortgages to 25 years from 30 years – have not affected their buying timeline, while one-in-five (19 per cent) say they will have to wait longer before buying as a result.

“A shorter amortization is the most responsible approach to home financing; it’s something BMO has been encouraging their customers to consider for years, as it means becoming debt-free sooner,” noted Ms. Parsons.

Additional findings include:

  • Six-in-ten (63 per cent) first time buyers have made cutbacks to their lifestyle to save for their first home, with just one-in-four (27 per cent) expecting their parents or other family members to help them pay for their first home
  • The majority (59 per cent) of first-time buyers have had to hold off buying their first home because of increasing housing prices
  • The same number (59 per cent) wish they had bought their first home five years ago

The BMO First Time Home Buyers Report was conducted by Pollara. Survey results cited in this report are from online interviews with a random sample of 2,000 Canadians 18 years of age and over, conducted between February 25 and March 5, 2013. As a guideline, a probability sample of this size would yield results accurate to ± 2.2 per cent, 19 times out of 20. Data has been weighted by region, gender, and age, based on the most recent Census figures, so that it is representative of all adult Canadians.

*Average house price not seasonally adjusted

About BMO Financial Group

Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified North American financial services organization. With total assets of $542 billion as at January 31, 2013, and more than 46,000 employees, BMO Financial Group provides a broad range of personal and commercial banking, wealth management and investment banking products and solutions.


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