33% of non-homeowners in Canada think they'll never own a home

Mar 15 2023, 1:48 am

The number of Canadians who think they are financially capable of attaining home ownership continues to dwindle amidst escalating home prices and unfavourable mortgage conditions.

Newly released results of a survey recently conducted by Oxford Economics, commissioned by Mortgage Professionals Canada, suggest the number of non-homeowners who do not plan to buy a home for their primary residence has increased to 33% as of the end of 2022 — significantly up from 25% in the middle of 2022, and 18% in late 2021.

Furthermore, the largest group of non-homeowners who are planning to buy a home now plan to do so in the next five years (23%), followed by those who are planning in the next two years (15%), in the next 10 years (12%), sometime after the next decade (10%), and in the next year (8%).

Nationwide, 13% and 27% of young Canadians in the age groups of 18 to 34 and 35 to 54, respectively, indicated they will never purchase a home, which is lower than the 61% for those 55 and older, who are perhaps already set in their ways.

Interestingly, residents in the Maritimes (49%), Quebec (46%), and Manitoba/Saskatchewan (38%) are more likely to say home ownership is completely out of the picture than those in Ontario (30%), British Columbia (28%), and Alberta (also 28%).

As for the types of mortgages that Canadians hold, as of the second half of 2022, 69% of all mortgages had a fixed rate (up from 66% in 2021), while 25% had a variable rate (down from 26% in 2021).

With the Bank of Canada’s consecutive interest rate hikes between March 2022 and earlier in 2023, about 30% of variable-rate holders are actively planning or considering a fixed-rate, while another 35% considered but decided against this.

The survey suggests 74% of mortgage holders can afford payment increases of up to 10%, and so far mortgage delinquency rates have stayed low at below 0.2%.

If they were placed into a situation of a rate increase of up to 20%, about half of the respondents (47%) suggest they would have issues with paying their mortgage.

Currently, 14% of recent first-time homebuyers have indicated they are having difficulty making their payments.

As for those who expect to renew their mortgages, 49% of mortgage holders expect to do so within the next three years, and 16% expect to do it within a year.

A strong majority of 62% of respondents noted they need outside help, such as from family, to make down payment, as they would otherwise not be able to afford a home without it. This represents an increase of 5% from the middle of 2022 and 6% from late 2021.

More favourable conditions for homebuyers are gradually expected to return over the coming year, following the Bank of Canada’s decision to hold its key interest rate at 4.5% in the March 2023 update. The interest rate is not expected to increase any further, with analysts projecting a decreasing trend will begin in late 2023 or early 2024.

Kenneth ChanKenneth Chan

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