This cohort has a significant influence in the total share of new mortgages, central bank says
First-time homebuyers in Canada tend to be significantly younger than other types of property buyers, according to the Bank of Canada.
The median age of this demographic was 36 years, compared to the roughly 50 years among investors and repeat buyers. This is apparent in the income distributions of different buyer cohorts, the central bank said.
First-time buyers “tend to have the highest loan-to-income ratios at the time of mortgage origination,” the BoC said. “As a result, they greatly influence the total share of new mortgages with loan-to-income ratios above 450% – a key metric the Bank of Canada uses to monitor the vulnerability related to household indebtedness.”
Read more: Mortgage demographics seeing a gradual shift – analysis
First-time buyers also remain the largest home purchaser group in Canada, representing fully 50% of residential transactions since 2014.
However, a combination of scarce housing supply and incessant home price growth might soon drive a shift in these patterns.
“If [homeowners] have equity in their home and they want to buy something else, that’s not a problem – but I think for first-time homebuyers elsewhere, it’s definitely a real struggle,” Graeme Moss, of Fair Mortgage Solutions, told Canadian Mortgage Professional recently.
Even younger Canadians who have decent credit scores aiming to make smaller down payments might find it “very, very difficult” in the current climate, Moss said.
“I don’t think I’ve ever seen such a hard time for first-time homebuyers. A lot of them have the expectation that they’ll never get a home,” Moss said. “I think that, going forward, [getting the help of] parents or co-signers will be much more [prominent] for first-time homebuyers. … The income for the average person is fairly average and modest. To get a house right now, they need that sort of extra help, for sure.”
