The Bank of Mom and Dad is not just being tapped by first-timer buyers, as Canadian homeowners looking to move up in the market are increasingly turning to parents for financial help, according to the BMO 2015 Home Buying Report released today.
The report said 42 per cent of current home owners looking to upsize their home are expecting help from family to bridge the financial gap.
Another 42 per cent of first-time buyers are also expecting their parents or relatives to help pay for their first home, up 12 percentage points from last year.
"Whether buying a first home or moving onto another home, we're seeing more and more buyers embark on the journey with help from family," said Martin Nel, Vice President of Personal Banking Products, BMO Bank of Montreal.
The report also found:
- Canadian homeowners hoping to buy a more expensive home aim to spend $473,900 on average.
- First-time buyers are planning to spend an average $312,700 – this is down from $316,100 in 2014, despite rising house prices.
- The average down payment for upsizing home buyers is 26 per cent, or $123,214, compared with 19 per cent, or $59,413, for first-time buyers.
- First-time buyers turning to their parents for help expect them to loan or gift an average of 12 per cent of the average cost of their purchase.
- Upsizers who are depending on family help expect them to shell out an average of 20 per cent of the cost of the home.
- Nearly half (48 per cent) of first-time buyers are willing to enter a bidding war – up from 35 per cent in 2014.
- Only 36 per cent of upsizers are willing to enter a bidding war.
“The increase in competition from a growing number of Millennial buyers is helping to push up prices in some major markets, leading some first timers to rely on financial support to help them enter the market," said Robert Kavcic, Senior Economist, BMO Capital Markets.