Surging interest rates in Canada have led to a reduced appetite for fresh housing loans, particularly among younger Canadians.
A recent report from Statistics Canada has disclosed how various income and age groups have been impacted by the deceleration in the mortgage sector, which has now reached its lowest point since 2001.
The report underscores that households headed by individuals under 35 have seen a decline in their average mortgage obligations.
“Prospective homeowners may be turning away from the housing market due to affordability concerns,” wrote Statistics Canada.
This age group stands alone in experiencing a reduction in their mortgage burdens. The report suggests a range of potential explanations for this phenomenon.
One plausible scenario is that younger homeowners who made their property purchases during a period of lower interest rates are now repaying their mortgages at an accelerated pace.
An alternate cause could be that some young homeowners are opting to sell their current residences and acquire more economical ones, thereby decreasing their mortgage liabilities in the process.
However, the report also conveys that certain aspiring first-time homebuyers face impediments to entering the housing market.
The cost of homeownership in relation to the median household income, has soared to levels not seen in nearly four decades, according to Royal Bank’s housing affordability index.
Consequently, for some young households, the prospect of homeownership has become increasingly unattainable.
A recent Leger poll found that a substantial number of Canadians blamed the Liberal government’s handling of housing for the current market woes.
In response to the survey, 40% of Canadians said they blamed the federal government for the growing housing crisis, while 32% blamed the provinces.
