Buying your first home can feel overwhelming, especially as we find ourselves in a high rate environment with the increased cost of living. All of this aside, many Canadians are starting to find alternative ways to reach their homeownership goals – and within a reasonable budget too. Here are some tips and trends to help you navigate the current market and finally get your foot in the door of your own home.
New Ways to Buy a Home
- Online tools: Many are turning to digital platforms like ours at Homewise to find properties and secure mortgages.
- Shorter fixed-rate mortgages: While fixed-rate mortgages remain popular, shorter terms are gaining traction.
- Consulting a broker: Nearly half of all buyers are using brokers as often as lenders, particularly in Ontario and British Columbia.
Short-Term Market Expectations
On July 24th, the Bank of Canada cut the overnight rate 25 basis points to 4.50% – previous at 4.75%. As rates decrease, mortgages become more affordable, which means this recent announcement could potentially encourage more people to start house hunting this fall.
While it’s important to note that major cities are becoming more buyer-friendly, even with the recent rate drop, we shouldn’t expect a massive surge in demand. A rate drop, however, could signal to cautious buyers that it’s a good time to make a move.
Finding Hidden Opportunities
For first-time buyers, there’s good news. While interest rates are considerably high, they’re gradually declining, which makes borrowing easier. Additionally, home prices are dropping, offering a unique opportunity to enter the market confidently. Homes that sit on the market longer often sell at lower prices, providing hidden gems for savvy buyers.
Saving for a Down Payment Despite Inflation
Saving for a down payment is challenging with rising living costs, but it’s doable. Many first-time buyers receive financial gifts from family. According to CMHC, 38% of buyers received an average of $77,487 as a gift for their down payment. Additionally, only one-third of buyers take full advantage of tax-free savings accounts like RRSPs and FHSAs, which offer significant benefits. While the First-Time Home Buyer Incentive is discontinued, other resources like the Land Transfer Tax Rebate, Home Buyers Plan, and First-Time Home Buyer Tax Credit are still available.
Smart Steps for Homebuyer Can Take Today
- Plan Your Finances: Understand your monthly expenses and savings to create a clear budget.
- Get Pre-Approved: Determine whether a fixed-rate or variable-rate mortgage is best for you. Assess your risk tolerance and financial flexibility.
- Seek Expert Advice: Work with a knowledgeable mortgage specialist like us at Homewise to find the best mortgage for your situation.
By staying informed about market trends and leveraging innovative solutions, first-time homebuyers can navigate higher rates and inflation with confidence. With careful planning and the right resources, achieving your dream of homeownership is still within reach, even in today’s complex economic environment. At Homewise, we’re here to help you at every step. Connect with us today to get started.
