Survey surfaces major education gaps among Canadians as rising interest rates create anxiety, uncertainty and complexity for prospective homebuyers and homeowners
TORONTO, June 29, 2022 /CNW/ - According to a recent real estate survey commissioned on behalf of TD, the rapidly evolving interest rate environment may be creating added complexity for Canadian homeowners and prospective homebuyers. The TD Real Estate survey also reveals that would-be buyers are willing to make new compromises to get into the housing market, with 30% of Canadians polled saying they would even be willing to purchase and live in a home with loved ones outside their immediate family. Twenty-nine per cent (29%) of Canadians surveyed say they'd sacrifice outdoor space, while 26% are willing to give up on the overall size of their home in order to buy a home.
These compromises come as interest rates continue to rise and inventory stagnates in markets across the country. With record-low rates being the norm for years, many first time and younger homebuyers are now contending with their first cycle of rising rates, raising questions and highlighting information gaps among Canadians regarding affordability.
Rate Hikes Abound, Canadians Compromise
Canadians are becoming increasingly concerned about affordability and what effects rate hikes will have on them. The TD Real Estate survey revealed that three quarters (76%) of Canadians who are likely to buy a home in the next year agree they are worried about the impact that rising rates will have on what home they can afford. Moreover, four-in-ten (38%) Canadians agree they are confused about what rising rates mean for them.
Despite that uncertainty, three-in-five (58%) homeowners surveyed expect to take some form of action relating to their home within the next year. Forty-two per cent (42%) are likely to renovate and 13% say they will likely sell. Ontarians were the most likely to renovate their home in the next 12 months, with 47% preferring to renovate rather than sell.
"Rising interest rates affect all Canadians, especially those who are looking to become homebuyers in the near future, and those up for renewal", says Frank Psoras, Senior Vice President Real Estate Secured Lending at TD. "In today's dynamic market, understanding the impact of rising interest rates is critical to establishing and maintaining financial health, regardless of where you are on your home journey."
Bridging the Knowledge Gap
Despite being prepared to buy, sell or renovate their home, a quarter (26%) of Canadians surveyed admit they did not have a good understanding of the impact of rising rates. An additional one-in-three (31%) respondents believe that interest rates don't impact them or their mortgage, highlighting a potential knowledge gap about the impact this could have on household budgets.
The TD Real Estate survey also identified a lack of knowledge when it comes to other notable financial aspects tied to buying or owning a home:
More than half of respondents (52%) aren't knowledgeable about a home-equity line of credit (HELOC) or how it differs from a mortgage
One-in-three Canadians surveyed (33%), don't feel knowledgeable when it comes to how rising interest rates may affect their ability to renew their mortgage, while a quarter (26%) are surprisingly unaware of potential prepayment charges for selling their home before the end of their mortgage term
Nearly 40% of respondents claim to not be knowledgeable about the difference between variable interest rates and fixed interest rates
Of the prospective homebuyers surveyed, 27% admitted to not knowing or understanding many of the costs associated with buying a home, highlighting a sizable number of Canadians who lack important financial information, especially key as the real estate landscape continues to evolve
Four-in-ten (40%) Canadians who do not currently own their home but say they are likely to buy a home within the next year are not knowledgeable about how the mortgage pre-approval process works.
Homebuying Ambitions Remain Strong
Despite the evolving market conditions, many Canadians are still keen to make a move, with one-in-four (24%) surveyed sharing that they are at least somewhat likely to buy a home in the next year.
"What we're seeing from this survey is that Canadians aren't putting their home decisions on hold, and nor should they," says Frank Psoras. "That said, this is a complex and evolving environment, and if you're thinking about buying or need to renew in the near-term, consider meeting with a TD mortgage specialist or financial advisor to help get a clear picture of what you can afford now."
To help navigate this complex environment, TD offers advice and flexible payment options to help you prepare for the unexpected. As your financial needs grow and change over time, it's helpful to understand what mortgage products and flexible payment options might be available to you. Visit TD's Flexible Mortgage Options site to learn more about the kinds of payment options that may be available to you with a TD mortgage.
TD also offers a wide array of online services, including the TD Mortgage Affordability Calculator, which can help determine what Canadians may be able to afford. With a mortgage pre-approval, TD will hold your rate for 120 days, so you can shop with confidence knowing you're protected from future rate increases. To get specialized advice to help with your home ownership journey, visit td.com/ca/en/personal-banking/products/mortgages/.
About the TD 2022 Real Estate Survey
TD Bank Group commissioned Ipsos to conduct a national online survey of 2,000 Canadians aged 18+. This poll was conducted between May 20 and 25, 2022.
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group ("TD" or the "Bank"). TD is the fifth largest bank in North America by assets and serves more than 26 million customers in three key businesses operating in a number of locations in financial centres around the globe: Canadian Retail, including TD Canada Trust, TD Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD Insurance; U.S. Retail, including TD Bank, America's Most Convenient Bank®, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in The Charles Schwab Corporation; and Wholesale Banking, including TD Securities. TD also ranks among the world's leading online financial services firms, with more than 15 million active online and mobile customers. TD had CDN$1.8 trillion in assets on April 30, 2022. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.
SOURCE TD Bank Group
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