Since 2022, the average mortgage debt has increased by 1.3% across all households, says StatCan
Canada’s youngest homeowner demographic is the only consumer cohort to have reduced its mortgage debt load since rates started rising in 2022, according to the national statistics agency.
New data from Statistics Canada showed that since 2022, households aged less than 35 years managed to cut down their average mortgage debt by 5%, compared to a 1.3% increase seen across all households.
StatCan said that this trend seems to be driven by various factors.
“Prospective homeowners may be turning away from the housing market due to affordability concerns, while existing homeowners who purchased a home when interest rates were much lower a few years ago may be paying off their existing mortgage debt balances or moving into more affordable accommodations,” StatCan said.
The Canadian economy is likely to see a moderate recession, stemming from rising debt service costs due to mortgage renewals, until mid-2024, according to a new analysis by Oxford Economics.
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 4, 2024
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Debt-to-income ratios were the highest for core working-age households (aged 35 to 64) in Q3 2023, ranging from 164.2% to 255.9%. These proportions grew on an annual basis, especially among those aged 35 to 44 years (up by 6.2%) and those aged 55 to 64 (up by 5.9%).
“Debt for core working-age households increased at a faster rate than disposable income, as employment income gains were offset by higher debt charges,” StatCan said.
During the same period the debt-to-income ratio went down among the youngest households (down by 10.7% among those aged less than 35 years) and seniors (down by 3.2% among those aged 65 years and older).
“While the ratio for the youngest households declined due to reductions in mortgage debt combined with strong wage gains, seniors benefitted from gains in investment earnings,” StatCan said.
