First-time buyers take their time when purchasing a home

Manitoba first-time home buyers and their next-door prairie province neighbours are prone to take their time when it comes to purchasing a home, according to a new survey.

First-time buyers in Manitoba and Saskatchewan spend more than nine months looking for a home and view more homes than people in the rest of the country, according to the first TD Canada Trust Home Buyers Report, which surveyed Canadians who have purchased their first home in the past two years or intend to purchase a home in the next two years.

On average, people in Manitoba and Saskatchewan view more than 15 homes before buying. In fact, 20 per cent view more than 25 homes.

They spend a lot of time shopping because they plan to spend many years in their first home. Fifty-five per cent of buyers plan to spend more than 10 years in their home or never plan to sell.

More than in any other province, people in Manitoba and Saskatchewan would prefer a newer home over an older home if price points were similar (81 per cent versus 75 per cent nationally). In addition, almost three-quarters of first-time home buyers in the region are leaning towards fully-detached homes. 

Compared to those surveyed in other provinces, more respondents in Manitoba and Saskatchewan are expecting to pay market price or more for the features they’re looking for. Thirty-six per cent expect to pay asking price and nine per cent expect to pay more, compared to only 29 per cent and six per cent nationally, respectively. Fifty-five per cent say they expected or expect to pay less than asking price, versus 65 per cent nationally.

“It’s only natural to want your first home to be the home of your dreams, but it is important to be realistic about what you can afford as a down payment and what that will mean for both the type of home you buy and for your mortgage payments over time," said Farhaneh Haque, regional sales manager, mobile mortgage specialists, TD Canada Trust. 

“I advise first-time homeowners to consider a larger down payment, because a 10 per cent or greater down payment will make a big difference. It may mean that you need to save longer before buying your first home, but it will pay off in the end,” Haque added.

Actually, the survey found nine-in-10 buyers in Manitoba and Saskatchewan reported putting down as much as they can afford for a down payment. Seventy per cent say they saved or plan on saving for two years or less for their home purchase.

Only 30 per cent of home buyers in Manitoba and Saskatchewan plan to have more than a 20-per-cent down payment. The remaining 70 per cent will require their mortgage to be insured by organizations like the Canada Mortgage and Housing Corporation (CMHC).

On average, people in the two provinces plan to put down the smallest down payment at 11.4 per cent, compared to 13.1 per cent nationally). 

Slighty more than half are worried about being able to afford their home if interest rates rise.

Just after the report was released, mortgage rates charged by Canada’s chartered banks actually dropped slightly.

Seventy-one per cent of those surveyed in Manitoba and Saskatchewan have or plan to have a fixed-rate mortgage. 

“Historically,” said Haque, “you are more likely to save interest costs with a variable rate or short-term mortgage option, so if they can handle some volatility then I recommend buyers choose a variable rate. If people are adverse to interest rate fluctuations then a fixed-rate is best.”

Nearly all home buyers are making informed financial decisions before buying their home. Top activities before buying a home include learning about mortgage options (93 per cent), getting pre-approved (93 per cent), calculating closing costs (88 per cent) and speaking to a mortgage lender before shopping for a home (88 per cent). 

However, land transfer tax, legal fees and closing costs were the top costs that buyers felt unprepared for at 48 per cent, 46 per cent and 43 per cent, respectively.