Residential Market Commentary - Real Estate Knowledge Gap
Another one of the country’s big financial institutions has produced a survey that suggests Canadian homebuyers and homeowners are unclear about what is happening with rising interest rates. Last month it was one of Canada’s major insurance companies. Last week it was one of the big banks.
While it is hard to say that more people are confused it seems apparent that, in these uncertain times, more people have come to realize that their homebuying decision and their financial situation have become more complex.
The real estate survey of 2,000 Canadians, aged 18 and up, was conducted by Ipsos in late May. It suggests that the desire for homeownership remains strong, with 24% of respondents saying they are at least somewhat likely to buy a home in the next year. The survey also indicates there is a knowledge gap between that desire and the practical financial aspects of making the purchase:
52% say they are not knowledgeable about a home-equity line of credit (HELOC) or how it differs from a mortgage
Nearly 40% are not knowledgeable about the difference between variable and fixed interest rates
33% don't feel knowledgeable about how rising rates could affect their ability to renew their mortgage
26% are unaware of potential prepayment charges for selling their home before the end of their mortgage term
Of the prospective homebuyers surveyed, 27% admitted to not knowing or understanding many of the costs associated with buying. Of those who expect to buy within the next year, 40% say they are not knowledgeable about how the mortgage pre-approval process works.