Mr. Robert Kavcic reports

BMO SURVEY: RISING RECESSION CONCERNS AMONG CANADIANS SIDELINING PROSPECTIVE HOMEBUYERS

Bank of Montreal's latest BMO Real Financial Progress Index reveals that while over two-thirds (67 per cent) of homebuyers are waiting for interest rates to drop before purchasing a home -- a 5-per-cent decrease from 2024 -- experts say many more Canadians may take a wait-and-see approach as concerns about the prospect of an economic recession increased from 60 per cent to 74 per cent from March to April, 2025.

"Canada's housing market remained under pressure heading into the spring, with sales and prices both weakening further," said Robert Kavcic, senior economist, BMO Capital Markets. "There is some clear underlying weakness as inventory builds and investors remain absent. Suffice it to say, homebuyers are losing confidence and motivation, especially in areas of B.C. [British Columbia] and Southern Ontario."

The BMO survey examines how concerns about the economy have influenced Canadians' homebuying decisions:

• Revisiting rates -- Over two-thirds (67 per cent) of prospective homeowners believe rates affect their buying decisions. Two in five (38 per cent) Canadians are waiting for rates to drop to 3 per cent or lower before purchasing or refinancing home. In addition, 44 per cent admit they are unsure about the rate they would be comfortable with to move forward with buying or refinancing their home.
• Missed momentum -- When looking at the current housing market, 56 per cent of prospective homeowners feel they missed their moment to buy a home. Two-thirds (66 per cent) of millennials feel they had missed their homebuying moment -- more than any other generation.
• Challenged confidence -- While 59 per cent of Canadians believe home ownership is one of their greatest life aspirations, half (50 per cent) believe owning a home is less attainable than it was 12 months ago, and two-thirds (66 per cent) are less confident that they will own a home in their lifetime compared with five years ago.
• Deferred demand -- Among the 38 per cent of homebuyers planning on purchasing a home in the near future, only 14 per cent plan to in 2025 and a quarter (24 per cent) plan on doing so in 2026 or later.
• Location, location, location -- More than half (52 per cent) of aspiring homebuyers would consider moving to a different province or country in order to afford buying a home.

"While current economic conditions present uncertainties and challenges, there are opportunities for Canadians to achieve the goal of home ownership with guidance and planning," said Gayle Ramsay, head, everyday banking segment and customer growth, BMO. "Working with a professional adviser can help homebuyers stay informed and navigate the current environment, understand the strategies available, then develop a personalized plan that prioritizes resilience and long-term stability, empowering them to pursue home ownership while making real financial progress."

Despite short-term concerns about the housing market, the BMO Real Financial Progress Index found over two-thirds (70 per cent) of Canadians feel confident in their financial situation, but fear of unknown expenses (82 per cent), concerns about their overall financial situation (81 per cent) and housing costs (72 per cent) are among the leading sources of financial anxiety.

Reimagining the Canadian dream

While 57 per cent of homebuyers believe home ownership is more about attaining a life milestone than making a good investment, many are re-evaluating their approach to homebuying:

• Bank of mom and dad:
  • 43 per cent of homeowners say they could not have purchased their home without assistance from family.
  • Over a quarter (27 per cent) of Canadians expect financial support from their parents and/or grandparents, with 6 per cent expecting assistance for the down payment for a home, 8 per cent expecting help with monthly rent, and 7 per cent expecting support for home renovation costs.
  • Among the 39 per cent who plan to provide financial help for their child(ren) and grandchild(ren), 5 per cent plan to contribute to the down payment for their home and 4 per cent plan to contribute toward their first-home savings account (FHSA).
• Shared home ownership -- Forty-five per cent would consider buying a home with friends, family members or other people they are not romantically involved with, with generation Z (63 per cent) and millennials (50 per cent) being the mostly likely to consider a shared home ownership approach.
• Reconsidering renting -- 61 per cent of Canadians are content renting and do not feel pressured to buy a home, a sentiment highest among boomers (83 per cent) and generation X (61 per cent). Over half (51 per cent) of Canadians believe renting is more flexible.

"While home ownership continues to represent financial progress for many, we are finding Canadians are beginning to explore new and different pathways to meet their goals as economic uncertainty grows and priorities shift," said Ms. Ramsay. "As many first-time homebuyers explore new options or wait for their chance to enter the market, we encourage Canadians to work with a professional adviser or planner to learn more about the different paths to home ownership and build a personalized financial plan them get into the home they want within a realistic timeline."

BMO helps homebuyers make real financial progress

BMO offers convenient tools and resources to help customers throughout their homebuying and home ownership journey, including:

• First-home savings account -- Fifty-eight per cent of Canadians plan on using the FHSA and/or home buyers' plan (HBP) from their registered retirement savings plan (RRSP) for their home purchase. The FHSA is a tax-advantaged registered savings plan that combines the benefits of a registered retirement savings plan and a tax-free savings account (TFSA), where contributions are tax deductible, earnings are tax-sheltered, and withdrawals are tax-free when used toward qualified first-time home purchases. First-time home buyers can contribute up to $8,000 a year, with a lifetime contribution limit of $40,000.
• BMO SmartProgress -- Customers can learn more about home ownership, budgeting and other personal finance topics from BMO SmartProgress. The on-line education platform organizes personal finance topics into playlists, enabling Canadians to learn more about how to manage their finances in a widely accessible and innovative platform.
• Preapproval -- For homebuyers, getting preapproved provides a cushion for due diligence when purchasing a home. In addition to visiting a local branch to speak with an adviser, BMO offers the ability for homebuyers to apply for mortgage preapproval on-line. BMO also offers the longest rate guarantee period of any major Canadian bank at 130 days.
• Prequalification -- To get started with their homebuying journey, prospective homebuyers can get a mortgage estimate in one minute with a 130-day rate hold. Using a soft credit check that will not affect their credit scores, customers will be able to know how much they can potentially afford for a home, based on information such as income, assets and debt.
• Mortgage renewal tools -- To help prepare for a mortgage renewal, customers can get a tangible sense of their mortgage payments upon renewal using BMO's mortgage renewal calculator. Customers can also view their personalized renewal rate 180 days before renewal and quickly renew their mortgage in the BMO app or on-line banking.

About Bank of Montreal

BMO is the eighth-largest bank in North America by assets, with total assets of $1.5-trillion as of Jan. 31, 2025. Serving customers for 200 years and counting, BMO is a diverse team of highly engaged employees providing a broad range of personal and commercial banking, wealth management, global markets, and investment banking products and services to 13 million customers across Canada, the United States, and in select markets globally. Driven by a single purpose -- to boldly grow the good in business and life -- BMO is committed to driving positive change in the world, and making progress for a thriving economy, sustainable future and inclusive society.