High prices, rising interest rates and strict new government regulations are conspiring to keep the millennial generation out of the housing market, according to a credit agency TransUnion.
In a new study, TransUnion claims that there was an 18% decline in the number of mortgages taken out by millennials (people aged 24 to 38) during the second quarter of this year. TransUnion said that young adults are mostly entering the real estate market for the first time and struggling with a requirement for a 20% down payment, as well as increasingly unaffordable sale prices and tighter borrowing costs as interest rates climb higher.
"We think the drop is a combination of affordability and new rules — and for new rules it's a combination of less qualifying under new rules as well as a segment that perhaps qualify for less and are waiting it out for either home values to drop so they can afford more or waiting to save more of a down payment," said Matt Fabian, Director of Financial Services Research at TransUnion in an interview with CBC News.
On the flip side, TransUnion found that mortgage borrowing rose in the second quarter among seniors aged 73 to 93. TransUnion said this older generation may be taking on new mortgages at their advanced age to help younger family members afford a home.
TransUnion found that, overall, Canadian debt continues to grow. Outside of mortgages, average debt balances per consumer increased to $29,648, a 3.9% increase over the second quarter of 2017. The average credit card balance in Canada rose 3.5% to an average of $4,200 per person in the country.
