There’s been a steep drop-off in the volume of mortgages that Canada’s millennials are taking out, a sign that the country’s faltering housing market could see more weakness ahead.
According to new data from credit bureau TransUnion, new mortgage originations among millennials in Canada fell by 19.5 per cent between the last quarter of 2017 and the first three months of 2018, when tougher new federal mortgage rules kicked in.
That’s a much steeper drop-off than seen in other age groups. For the country as a whole, mortgage originations were down 8.8 per cent, and among the elderly pre-war Silent Generation, mortgages actually grew by 7.8 per cent.
Watch: How much home can “peak millennials” afford in Canada? (Story continues below)
The older generation is likely borrowing against the value of their home to finance their lifestyle, while “millennials may find themselves unable to afford more expensive housing, and hence are opting for lower-value homes,” explained Matt Fabian, director of research and analysis at TransUnion Canada, in a statement.
For Fabian, the drop-off in mortgages raises some questions. “Are consumers taking a wait and see approach to the new qualifying rules that came into effect? Are they pausing to measure the effect on home …read more