Real estate sense of urgency

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 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 home-ownership 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 six in 10 mortgage holders say they have taken advantage of current low rates to pay off more principal.

It also revealed that 18% of homeowners say they have made a lump sum payment on their mortgage and 16% have doubled up payments to reduce the principal.

Meanwhile, as many as one-third of respondents 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% of current and future homeowners think house prices are too high. It also found about 33% of respondents 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 the number of home sales are expected to rise 10% to 510,000 this year, while average prices are expected to jump 8% to a record $345,000.

Like most economists' expectations, Scotiabank said the housing market in the spring should see a flurry of activity, particularly ahead of new HST tax 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 Bank of Canada will then start raising interest rates.

("Survey dissects mortgage concerns" Source: Reuters/National Post)