An average-wage worker in Canada looking to buy a home will now have to save up for a down payment for at least twice as long compared to 15 years ago, according to a recent study by Mortgage Professionals Canada.
A 20 per cent down payment for a house in the median range is approximately worth 102 weeks at the average Canadian wage, a development that observers said should be attributed to continuous increases in home prices and stagnant income growth.
“The math quite simply says incomes have not risen at all in comparison to house prices. It’s taking longer and longer for those first-time buyers to amass the means for a down payment,” Mortgage Professionals Canada president and CEO Paul Taylor stated in the report, as quoted by GlobalNews.ca
Taylor added that first-time buyers will almost certainly be unable to allocate every paycheque towards saving for the down payment, meaning that it will actually take far longer than 2 years for many of them.
The study came in the wake of wide-ranging changes to federal rules governing mortgages. Among the new stipulations is a harsher stress test mandating buyers with down payments lower than 20 per cent to qualify for the Bank of Canada’s posted five-year fixed rate of 4.64 per cent, which will lead to some buyers qualifying for more expensive loans.
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