Canada's first-time home buyers are facing a deep squeeze. More than half of recent buyers have turned to non-mortgage debt like credit cards or lines of credit just to cover unexpected costs such as repairs or legal fees. At the same time, nearly half relied on gifted money—often from family—for their down payment, a sharp increase compared to just a few years ago. These funding strategies are no longer rare—they’re becoming the norm.
Another striking trend is the growing number of first-time buyers co-owning homes with people who won’t live there, usually parents or other relatives. This kind of arrangement used to be unusual but is now common. It shows that young Canadians are being pushed into financial setups that rely heavily on family wealth or outside support just to get a foot in the door of the housing market.
This shift is having ripple effects. By pouring more money into starter homes, these extra funds are driving prices up rather than making housing more affordable. Those without access to gifted money or co-buyers are left behind, facing an even steeper climb into the housing market. What used to be a level playing field is now increasingly shaped by privilege and access.
On top of that, mortgage costs are rising. Inflation came in hotter than expected, pushing up bond yields that help set fixed mortgage rates. That means higher borrowing costs are likely coming soon, adding pressure to already stretched budgets.
At the same time, the Bank of Canada is showing signs of losing control over inflation. Core inflation, the measure the bank watches most closely, is rising even as headline numbers look better due to temporary factors like tax changes. This raises concerns about whether interest rate cuts were a mistake, possibly encouraging more borrowing while prices are still climbing.
Canada now finds itself stuck between two problems. First-time buyers are taking on unstable forms of debt and support, while the central bank’s tools are failing to keep inflation in check. With rising costs and uncertain policy, both the housing market and the broader economy are being pushed into risky territory.