TORONTO (Reuters) - More Canadians are looking to enter the housing market ahead of higher interest rates and home prices that are expected to arrive later this year, two surveys showed on Wednesday.
More than two-thirds of Canadians expect mortgage rates to rise over the next year, with about the same number of mortgage holders concerned about higher rates, a Royal Bank of Canada annual homeownership survey showed.
But the survey, conducted by Ipsos Reid, also showed three-quarters of homeowners believe preparation is key to handling upcoming changes such as higher mortgage rates.
The survey showed 6 in 10 mortgage holders say they have taken advantage of current low rates to pay off more principal.
It also revealed that 18 percent of homeowners say they have made a lump sum payment on their mortgage and 16 percent have doubled up payments to reduce the principal.
Meanwhile, as many as one-third of indicate that talk of rising house prices and higher interest rates has influenced their buying decisions, according to a Bank of Montreal survey conducted by Harris-Decima.
“There’s definitely a sense of urgency among home buyers,” said Lynne Kilpatrick, senior vice-president of personal banking at BMO.
The same survey found 71 percent of current and future homeowners think house prices are too high. It also found about 33 percent of respondents complained they have lost sleep due to the stress of trying to buy a new home.
On Tuesday, Bank of Nova Scotia forecast in its real estate trends report that home sales are expected to rise 10 percent to 510,000 this year, while average prices are expected to jump 8 percent to a record C$345,000.
Like most economists’ expectations, Scotiabank said the housing market in the spring should see a flurry of activity, particularly ahead of new sales tax regimes in Ontario and British Columbia and tighter qualifying criteria for insured mortgages.
The market is expected to cool in the second half of the year, coinciding with forecasts that the Bank of Canada will then start raising interest rates.
Separately, a consumer confidence survey by the Conference Board of Canada found Canadians were generally more optimistic about employment and plans to make major purchases, while sentiment toward future finances weakened.
Reporting by Ka Yan Ng; editing by Rob Wilson