A growing number of millennials are resigning themselves to the fact that homeownership may be out of reach for them, according to a new poll.
Nearly three quarters (72%) of millennials say they have a goal of owning a home, but nearly half (46%) admit that goal is a “pipe dream,” according to the KPMG Millennials and Retirement survey.
“The combination of rising house prices, high levels of personal debt and annual incomes that are just a fraction of the cost of buying a home compared with their parents’ generation, is pushing the dream of homeownership out of reach for many millennials,” Martin Joyce, Partner, National Leader, Human & Social Services at KPMG, said in a release. “This is particularly challenging in the markets of Vancouver and Toronto.”
The survey notes that many millennials have already incurred high levels of student debt, while those who have managed to enter the housing market have taken on larger mortgages relative to their incomes compared to those before them.
Of those who have purchased a home, nearly half (46%) received a “financial boost” from their parents, according to the survey.
While millennials have shown themselves willing to take on higher levels of debt, they are also less optimistic about the payoffs. Two in five (38%) believe their house won’t be worth as much in the future.
Of those surveyed, their recommendations for the federal government to improve the situation include:
- improve housing affordability
- make it easier to access RRSPs for down payment funds
- implement a new registered savings program (like RESPs for education) for housing
- raise TFSA limits
Personal Insolvencies at a Record High
The rate of Canadians filing for personal insolvency has reached a 10-year high, according to new data from the Office of the Superintendent of Bankruptcy.
Canadians filed 13,200 bankruptcies and consumer proposals in October, a 13% increase compared to the same period last year. The last time that figure was as high was in September 2009 when 15,465 Canadians filed for insolvency.
For the full 12-month period, personal insolvencies were up 8.9% nationally, with Ontario leading the way with a 14.4% jump compared to the previous year. Insolvencies were up 9.3% in British Columbia and 1.7% in Quebec. All three territories saw their figures decline.
Mortgage Growth on the Rise
Residential mortgage credit rose in October by 6.8%—its fastest monthly pace of growth since April 2017.
The growth comes despite slightly higher interest rates in September and a slowdown in net hiring during the month.
“In the wake of the introduction of the tightened B-20 mortgage lending rules at the start of 2018, non-banks have seen higher growth in lending volumes than the chartered banks, but their trend growth rates have been converging over the course of 2019,” noted economists from Scotiabank in a research note.
This pickup follows a slowdown in mortgage credit growth seen in the first half of 2019.
“Housing demand continues to run ahead of supply in Toronto, Vancouver, and Montreal—and looks set to continue doing so as immigration rates keep rising,” the Scotiabank economist added. “In response, Canadians may be prioritizing borrowing to buy a home and throttling back on new consumer credit.”
Comparatively, consumer credit growth lagged, with borrowing decelerating in October to 2.4% month-over-month. That was down from 3.1% in September.