Increasing number of Canadians say it’s a bad time to buy a home, citing a lack of affordable options and market volatility.

  • Investor confidence in stocks, funds, TFSAs, RSPs and ETFs also up
  • 77 per cent of Canadians think mortgage interest rates will increase this year
  • Only 11 per cent of Canadians who don't own a home plan to purchase one in the next 12 months
  • Year-over-over, seven per cent more renters say they will continue to rent instead of buy

Toronto – Investor confidence in balanced mutual funds – which blend stock and bond investments – continues to grow, rising 10 per cent since December 2015, according to the latest Manulife Investor Sentiment Index. Coming in at 26 per cent on the index, this is the highest level of confidence in balanced mutual funds the survey has seen since 2011. 

“When we look at year-over-year results, we’re finding that investor confidence is up on nearly all investment vehicles,” said Kevin Headland, Senior Investment Strategist, Manulife. “The increased confidence in balanced mutual funds is indicative of investors’ needs for growth while balancing their uncertainty in the markets.”

Investors’ confidence in stocks, funds and own homes all up

Canadians’ confidence in stocks (13 per cent), balanced mutual funds (26 per cent) and investing in their own homes (45 per cent) is rising. The survey saw a slight decline in confidence in investment properties (17 per cent), cash (15 per cent), and fixed income (nine per cent).

A line chart displays investor confidence in TFSAs, RRSPs, RESPs, Mutual Funds, Segregated Funds and ETFs. Investor Confidence in these investment vehicles is on the rise year-over-year.

The Manulife Investor Sentiment Index has been measuring investors' views on a range of asset classes, and savings and investment vehicles, as well as their confidence in these areas since 1999. It also found that Canadians continue to be optimistic about their financial futures, but continue to take a conservative and responsible stance on their saving and investing.

Conflicting views on housing across the country

The survey found 29 per cent of Canadians believe it’s bad time to purchase a house, a six per cent increase from just six months ago. Lack of affordable options (68 per cent), and market volatility (31 per cent) are the top reasons for negative sentiment on housing.

A graphic illustrates a tug of war between similar percentages of Canadians who think it’s a good time to buy a home, and a bad time to buy a home. Surrounding paragraphs contain the details.

British Columbia respondents were the most likely to say it’s a bad time to buy a house (42 per cent). On the other hand, 38 per cent of Albertans perceive it to be a good time to buy a house (compared to 30 per cent of Canadians who thought the same). 

Survey results indicate that Ontarians and Quebeckers are divided on housing sentiment. In Ontario, 32 per cent of respondents think it’s a bad time to buy a house. Of the respondents in Quebec, 34 per cent said it is a good time to buy a house.

Canadians weigh in on interest rates

Seventy-seven per cent of Canadians think mortgage interest rates will increase this year, with renters (15 per cent) more likely to predict a significant increase. Respondents aged 65+, were most likely to predict a rate increase (84 per cent). 

Almost two-fifths of Canadians (37 per cent) think mortgage rates should be lowered (for both fixed and variable rates), in particular for respondents in Atlantic Canada and Quebec. Ontarians (27 per cent) are more likely to think variable mortgage rates are too low.

Renters vs. owners

Despite more Canadians responding that it’s a bad time to buy a house, 88 per cent still say owning a home is important to them, with 82 per cent citing it was their primary financial goal. 

“While home ownership remains a priority, Canadians are not necessarily willing to buy at any cost,” said Headland. “They are increasingly aware of affordability, whether it is the down payment amount or monthly payment and interest costs.”

Seventy per cent of Canadians who are currently renting plan to continue renting, a seven per cent increase from six months ago. Almost three quarters of renters surveyed anticipate interest rates to rise in 2017. 

Seventy-four per cent of Canadian homeowners want to increase the value of their homes, and 60 per cent wish to decrease their mortgage in the upcoming year. Forty-three percent of Canadians are planning to remain in their house when they retire.