Baby boomers and gen X are taking on more mortgage debt
In a surprising turn of events, Statistics Canada data showed older households took on more mortgage debt in the second quarter of the year, compared with the same period last year.
Households aged 55 to 64 years (straddling the baby boomers and generation X) and households aged 65 years and older saw a 6.5 per cent and 6.4 per cent uptick in their mortgage debt respectively. In comparison, the youngest households under the age of 35 (younger millennials and older generation Z) were the only age group to consistently reduce their balances since the end of 2022.
Experts say there’s a plausible reason for the figures: Higher housing costs are either pushing younger Canadians out of the market entirely, or leading young homeowners to sell, especially as their mortgages come up for renewal.
“That data is just a reflection of the market,” said mortgage broker Marci Deane, president of the Mortgage Brokers Institute of British Columbia.
However, she doesn’t believe older Canadians are buying more to drive the increase in their mortgage debt either, for similar reasons.
Instead, a greater number of older homeowners have been tapping into their home equity to free up cash, Deane said.
The most recent data from the Office of the Superintendent of Financial Institutions — the federal government agency that regulates banks, insurance companies and trust and loan companies — confirms that reverse mortgages are on the rise in Canada, with more than $8.5 billion in reverse mortgage debt outstanding at the end of August 2024. That’s an 18 per cent increase from last year.
“Absolutely, that has been a shift,” said Deane. “I do reverse mortgages in my practice — that part of my business has definitely increased in the last three years.”
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