This year should be another busy one in the housing market according to a new report on home buying intentions.

Royal Bank of Canada's annual home ownership survey showed that almost three in 10 Canadians polled, or 29 per cent, said they intend to buy a home over the next two years; another 13 per cent say they are very likely to. And the group most likely to lead the charge to the moving van will be 25 to 34 years of age (46 per cent).

Another positive indicator is that 10 per cent (up 2 per cent from last year) of those who plan to buy within the next two years, expect to buy a home in the next six months. Of those who are likely to purchase within the next two years, 41 per cent are currently renters.

"The move towards home ownership continues for Canadians," said Clayton Van Esch, Senior Manager, Mortgages, RBC Royal Bank. "Low mortgage rates, flexible payment plans, including no-down payment mortgages, are all part of the reason." The RBC survey, which polled 2,001 adults by phone, notes the largest increase among those people most likely to purchase homes came from the youngest sector of the economy with intentions among Canadians aged 18 to 24 at 36 per cent, up nine points from 27 per cent in 2004. However, the purchase intentions of older Canadians (55 and over) are also up, by three points to 15 per cent, the highest level since 1997.

While intentions to purchase a home within the next two years is greatest in Alberta, with 17 per cent of its population (up two points from 2004) saying they are "very likely" to buy a home within the next two years, the greatest increase is in Ontario, where those who are "very likely" to buy a home is up three points to 14 per cent.

For homeowners who are planning to purchase a home in the next two years, trading up is still the most popular reason given. However, the number of homeowners wanting to downsize has increased considerably. Forty-one per cent of homeowners (down six points from 2004) are planning to buy a bigger home than the one they live in now, while 30 per cent (up 10 points) say they plan to purchase a smaller house.

Also this week, Bank of Montreal cut one of its lending rates in a bid to capture a greater share of the $600-billion mortgage market.

BMO dropped the fixed rate for its seven-year mortgage by 160 basis points to 5.4 per cent. The current posted fixed rate for a three-year mortgage is 5.49 per cent. "Spring is traditionally the most active time for new home buyers with 40 per cent of annual home purchases historically taking place during the next four months," said Maria Racanelli, vice-president of personal banking at Bank of Montreal. The low seven-year fixed-rate mortgage is only available until June 30.

"The signal we get from the Bank of Canada . . . is that lending rates are likely to remain flat until late this year, after which we can probably expect to see some upward pressure," said Ms. Racanelli.

Staff