New data reveals buying timing intent among potential homeowners
Canadian homebuyers are hitting pause on their plans to purchase as buyer confidence took a nosedive coming into 2023.
A new report from digital mortgage platform nesto showed a sharp decline in homebuyer confidence among its users, with those “ready to buy” falling from 42% in November to 35% in December.
The decline is in line with the 50-basis-point rate increase implemented by the Bank of Canada in December, said report author and nesto co-founder and principal broker Chase Belair.
The December rate hike also brought the portion of users who are “just looking” from 58% to 65%.
“Looking at our clients’ purchase intent in December 2022, the alignment around buyer caution has remained the same since the summer,” added Belair.
These figures come as the Bank of Canada implemented its eighth consecutive rate increase this week, moving the key rate up by a quarter-point to 4.5%.
A release from nesto said that while this latest rate hike “creates unease,” buyers should also look forward to “a more balanced market in 2023” as home prices begin to decline in some provinces.
According to nesto’s report, the average home price in Ontario decreased by 11.1% from spring 2022 to present.
There was also an overall downward trend in median down payments in both Ontario and Quebec, with numbers returning to the levels seen in July 2021. Meanwhile, the median payment percentage plateaued.
Variable rates were also found to be significantly higher than fixed rates. This, Belair noted, eliminated “the loophole to qualifying for a higher mortgage through a lower stress test rate.”
The report further noted 20% growth in renewals since July 2021, coming from homeowners acting early to lock in lower rates ahead of further rate hikes.
