First-time buyers face challenging year

January 6, 2020

It will be difficult for first-time buyers to share in the expected housing recovery in 2020, according to Canada Mortgage News.
It cited a Canada Mortgage and Housing Corp. report that first-time purchasers dropped from 56 per cent of all homebuyers in 2018 to 47 per cent in 2019.
“The tightening of mortgage rules which has been taking place over the last four years is certainly having an effect. The rule changes were intended to slow home sales and prices. But like most government interventions, its had the opposite effect,” Canada Mortgage News notes. “Fewer first time homebuyers are now able to qualify. They aren’t alone. Private investors, or people owning a second or third property, are also finding it much more difficult to qualify for a mortgage.”
Potential first-time buyers are therefore facing a rental shortage and rising rent prices, and many are unable to qualify for home ownership even though mortgage could be less costly than rent.
More consumers are turning to mortgage brokers to navigate a more complex lending environment, the News stated. According to its report, nearly half (49 per cent) of homebuyers consulted a mortgage broker in 2019 compared to 36 per cent in 2018.