Government policy is contributing to a falling homeownership rate and younger Canadians are being impacted the hardest, says a new report from Mortgage Professionals Canada. It says by the time of the next federal election, 200,000 Canadian families “will have experienced the sharp disappointment of failing the newly implemented (mortgage) stress test, even though they can afford to borrow the amount they need.”

“The homeownership rate in Canada has fallen, as young, middle-class Canadians have found it increasingly difficult to make first-time purchases.  Government policies have contributed to the concerns. With the recent further tightening of mortgage rules, ownership challenges have been intensified, and the ownership rate is very likely to fall further,” says Will Dunning, chief economist for the association and author of the report.



It says the greatest risk to the economy is a policy error that causes house prices to fall, thus creating a slowdown in the economy.  “The market is already slowing under the weight of increased interest rates, and policies aimed at suppressing the market further might be adding to economic risks,” says Dunning.

And despite rising housing prices and government intervention, most Canadians view real estate in Canada as a good long-term investment and view mortgage debt as “good debt”.

“During the past decade, some commentators have taken a negative outlook of the housing market. Yet, Canadians have consistently shown confidence in residential real estate. These surveys have told us repeatedly that Canadians are happy with the real estate decisions they have made,” says Paul Taylor, president and CEO of Mortgage Professionals Canada.

The report says Canadians are highly motivated to repay their mortgages. Each year, approximately one-third take actions that will shorten their amortization periods. Mortgage arrears have remained very low in Canada, falling to just 0.24 per cent.

“The data clearly shows that the best policy to protect the mortgage market is to protect the jobs of Canadians, because history shows us that as long as they have jobs, they will meet their obligations,” says Taylor.

The report says Canadians have a lot of equity in their homes and are well positioned should a housing decline occur.

Other highlights from the report:

  • Homeownership in Canada is at 67.8 per cent; “a substantial drop from 69 per cent in 2011”
  • Ownership rates fell sharply for the youngest (first-time buyers) age groups – by more than four per cent
  • Six to 7.5 per cent of all potential buyers, insured and uninsured, will be unable to purchase a home because of the stress tests
  • In 2018, housing activity in Canada may fall by 12-15 per cent compared to 2016, which could dampen economic growth
  • Over the past 12 years, mortgage credit growth has averaged 7.3 per cent per year. The growth rate has slowed to a current 5.9 per cent and projected to be 5.5 per cent for 2018.
  • mrBean

    “Government policy is contributing to a falling home ownership rate and younger Canadians are being impacted the hardest” As long as we “welcome” 300,000 new emigrants every year; a portion of which will have the means to purchase and thus decrease the supply side of housing, younger Canadians will continue to suffer. The implementation of the stress test is more proof that the current government values natural born citizens less than new comers.

    • Michael Down

      You’re right.I’ve been in this business over 30 years and have seen advice for the past several years that our market is ready for a correction; but as long as we have high immigration with many wealthy buyers it won’t happen.

  • Ron Kelly

    The government has done this purportedly to protect buyers from a problem that has not yet and may never occur. It’s like shooting your pet dog so he doesn’t get rabies.

  • Ron Kelly

    The government should be helping people, particularly first time home buyers, to BUY homes, not creating artificial barriers to impede them.

  • Robert Ede

    good one!