Tue, 06 June 2023 | housing
The latest BMO Real Financial Progress Index reveals current mortgage rates are keeping many Americans from buying a home with 64 percent saying they are waiting on rates to drop before entering the market. Adding to the rate sensitivity of buyers, only 6 percent of Americans who say they plan to purchase a home soon plan on doing so this summer.
Compared to a year ago, homebuyers are dealing with much higher costs of ownership due to a combination of elevated mortgage rates, persistently high home prices and limited inventory, leaving housing affordability near the most challenging levels in more than three decades as a result of Federal Reserve rate hikes, according to BMO Economics.
BMO's survey also found Americans' perceptions of the economy has further affected their homebuying plans:
"Homeownership has traditionally been one of the best ways to secure long-term financial gains, build equity and achieve real financial progress," said Thomas Parrish, Head of U.S. Retail Lending Product Management at BMO. "It's crucial, especially in higher-rate environments, for Americans to talk to a mortgage advisor who can help prepare buyers for the homebuying process, work to determine how much a person can afford and clear up the misconceptions about the many paths to homeownership that exist. At BMO, our goal is all about sustainable homeownership, so having a greater understanding of all the expenses that come along with owning and seriously thinking about your budget is integral to long term success."
Americans report various sources of funding to pay for homes
The survey also highlights different financing strategies Americans intend to use for their home purchases:
"Most Americans understand how critical it is to establish a financial plan and our survey found three in four have set personal goals around money," said Paul Dilda, Head of U.S. Consumer Strategy at BMO. "Unfortunately, only 32 percent of Americans said they were meeting with their banker or financial advisor to help reach those goals. Regularly doing so will help ensure a secure plan and is imperative to reaching bigger financial aspirations, such as buying a home."