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Higher interest rates prompt some Canadians to reevaluate value of home ownership: CMHC

New data from the Canada Mortgage and Housing Corporation (CMHC) reveals higher interest rates are shifting some Canadians’ perspectives on housing as an investment.

Based on a recent CMHC survey of 4,000 mortgage holders in January 2023, the findings indicate a declining trend in the belief that owning a home is a good investment.

 

Confidence in mortgage process and homeownership benefits hits low point

 

CMHC’s analysis of consumer sentiment over the past five years shows that 2023 represents a year of low perceptions regarding the mortgage process and the perceived benefits of homeownership.

According to the survey results, 81 per cent of Canadians still perceive owning a home as a good long-term financial investment. However, this figure has dropped from 91 per cent in 2022, reflecting changing sentiment influenced by rising interest rates and mounting affordability concerns.

The report highlights that over half of respondents (55 per cent) believe the value of their homes will increase in the next 12 months, a substantial decline from 84 per cent in 2022.

 

The last 5 years in trends: How mortgage consumers are feeling, CMHC

 

Increasing uncertainty in the homebuying process

 

The CMHC report underscores the impact of rising interest rates on Canadians’ financial situations and the homebuying process. A significant 61 per cent—both first-time and repeat buyers—express uncertainty about the homebuying process. Paying too much for their homes is cited as the top concern by both groups.

More than a third of owners (35 per cent) said they faced unexpected costs during the homebuying process.

Nearly 40 per cent of buyers who received a monetary gift to assist with their home purchase stated that they would not have been able to buy a home that meets their needs without this financial support.

Rise of interest rates affecting Canadians’ financial stability

Approximately half of the respondents (50 per cent) reported being impacted by the increase in mortgage interest rates, with 74 per cent anticipating future impacts. Among those affected, 49 per cent face difficulty maintaining debt payments, including mortgages.

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