7/30/2025
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Posted in Mortgages and Real Estate by Vanguard Realty | Back to Main Blog Page
Young Canadian families are carrying smaller mortgage balances even as housing affordability becomes increasingly challenging, according to a new TD Economics report released Tuesday.
Average mortgage balances among households where the primary earner is under 35 years of age have fallen by $15,500 since their peak in the third quarter of 2022. The reduction stands at $11,000 compared to the first quarter of 2023.
This trend contrasts sharply with other age groups, where mortgage debt continues to climb. During the same period, mortgage balances increased by $18,000 for households aged 55-64 and by $4,000 for those aged 65 and older.
Housing market barriers drive changes
The decline appears partly explained by fewer young people entering the housing market or choosing less expensive homes due to affordability challenges. Household formation in this age group has surged, growing 2.5 times faster than other age groups over the past two years, yet many new households remain renters.
According to Statistics Canada’s 2024 Canadian Social Survey, more than half of young people report being very concerned about their ability to afford housing. Home ownership remains difficult for younger generations, with 35% of young adults renting compared to 23% of older age groups.
Growing share of mortgage-free young owners
Despite shrinking mortgage balances, the total value of real estate assets held by young families has actually increased since the third quarter of 2022. This gap suggests a growing share of younger households own their homes outright.
The Survey of Financial Security found that 8% of young households owned their property free and clear in 2023 – the highest share on record.
Parental support plays key role
The report suggests intergenerational wealth transfer may explain how young families are reducing mortgage debt despite modest income growth. As younger families reduced debt, older age groups took on more, particularly those nearing or in retirement.
A 2021 Statistics Canada study found that 17.3% of residential properties owned by individuals born in the 1990s were co-owned with their parents. Recent Bank of Canada research shows over 20% of first-time homebuyers received gifted down payments.
However, this pattern varies by income level. Among the lowest-income young households, the debt-to-income ratio surged from 244% before the pandemic to 446% in the first quarter of 2025, signalling rising financial strain and deepening intergenerational inequality.
Source: Canadian Mortgage Professional
First Time Home Buyers, Home Buyers, Home Buying Parental Support, Mortgage Consumers, Mortgage Debt, Mortgage Trends
