From the way many people talk about the Boomers lately, you’d think they have nothing to worry about. They are the last to enjoy a retirement age of 65, and many think that because Canada’s retirement pot is going to be drained by them, they’re going to get all the money too. While the first may be true (and the second all depends on your own opinion and perspective,) Boomers still have a lot to fret over. And not surprisingly, one of their greatest concerns is their children, and how affordable life will be for them in future years.
Their biggest fear is housing affordability, with many Boomers fearing that their children won’t be able to afford Toronto or Ottawa mortgages. This was shown in a recent BMO survey which showed that 48 per cent of Boomers think it will be harder for their children to buy a home than it was for them. The same survey shows that only 17 per cent of Boomers think it will be easier for their children to afford a home than it was for them.
The majority has reason to worry, when you take the survey’s findings into consideration along with recent reports from BMO Economics. Those say that the average price of a home has risen 99 per cent in this country over the past decade, while growth in personal income is up just over half that, at 53 per cent. To go along with the survey, the bank also gave some suggestions on how to lower the amount of Canadian and Toronto mortgages. These include shortening the amortization period, stress-testing mortgages, and making larger down payments.
Laura Parsons, Mortgage Expert at BMO also said when the survey was released, “In the current economic environment, buying a home is a more expensive endeavour for today’s younger generation than it was for their parents. With that in mind, today’s younger buyer needs to take a different approach to financing a home purchase to ensure that affordability is sustainable over the long term.”
She continued on to say, “These days, choosing a fixed mortgage is the winning strategy. That, combined with a maximum 25 year amortization, will result in better affordability over the long term, as it means paying less in interest, building equity sooner and ultimately becoming mortgage-free faster.”