More Gen Z borrowers are getting into Canada's mortgage market.Photo: ungvar / Adobe Stock

Property prices across Canada remain at peak levels, with the average cost of a home now $748,450 nationwide according to the latest data from the Canadian Real Estate Association (CREA).

Despite rising prices, that isn’t stopping the youngest generation of homebuyers from acquiring a mortgage.

New insights published by TransUnion in its Q4-2021 TransUnion Credit Industry Report (CIIR) show that Q3-2021 mortgage originations continued to rise amid chronically-low home inventory and sky-high prices, up 5.6 per cent annually.

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Gen Z consumers, those born between 1995 and present day, lead mortgage origination growth by just under 30 per cent year-over-year in Q3-2021. By comparison, originations for Millennials and Gen Xers were up 10.9 per cent and 4.7 per cent annually during the same quarter. Baby Boomers reported less mortgage origination volume in Q3-2021, down 7.1 per cent year-over-year.

Despite leading mortgage originations in Q3-2021, Gen Z makes up just four per cent of the total origination market, followed by Baby Boomers, Gen X and Millennials at 16 per cent, 37 per cent and 43 per cent.

Mortgage balances trend upward

As little market inventory and low interest rates pushed home prices upwards in Q4-2021, mortgage balances were also on the rise.

The average mortgage balance per consumer increased 10 per cent yearly to $320,835 according to TransUnion. In Q3-2021, average new account balances jumped 19 per cent from 2020 to $386,026.

Ontario and British Columbia had the highest new mortgage balances in Q3-2021, up 22 per cent and 19 per cent thanks to each province’s major markets. In Toronto, the average new mortgage amount rose 16 per cent annually to $580,470, while Vancouver’s went up 13 per cent year-over-year to $691,780.

Rising property prices continue to be one of the biggest roadblocks for those looking to enter homeownership. Forty-four per cent of respondents said that high home values were a barrier to homeownership according to TransUnion’s most recent Consumer Pulse study. Forty-two per cent cited not having enough for a down payment as their biggest hurdle, while 30 per cent of respondents pointed to a lack of stable employment.

Consumers return to pre-pandemic credit card spending

In addition to mortgages, the credit card market has also been experiencing growth.

TransUnion stated that credit participation increased 1.8 per cent year-over-year in Q4-2021, a trend that was started as more consumers opened new products and leveraged existing credit. Above-prime credit score consumers supported this growth who showed a 4.4 per cent increase in credit participation from the previous year. Credit card spend rates were up 20 per cent annually as the economy reopened and consumers returned to pre-pandemic spending patterns, noted TransUnion.

“As the latest wave of COVID recedes and the economy expands, consumers are reverting to pre-pandemic credit behaviours and lenders are active in seeking growth opportunities,” said Matt Fabian, director of financial services research and consulting at TransUnion, in the report. “Lenders have some catching up to do after the pandemic disrupted volumes and balances, and consumer demand is picking up.

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