Bank of Mom and Dad funds a significant share of first-home buying

Among those who have bought their first home in recent years, 35% got help with the down payment and a quarter get help with monthly payments

Bank of Mom and Dad funds a significant share of first-home buying
Steve Randall

Buying a home is a deeply engrained desire among young Canadians who value the security it provides and the potential for long-term returns.

But getting onto the property ladder has been challenging for many years due to rising home prices and tight supply and the cost of living is making it even harder.

A poll of those who have become first-time buyers in the past two years shows how much young Canadians rely on their parents or other relatives as they begin their homeownership journey.

The study was completed by Environics Research on behalf of mortgage insurer Sagen MI Canada and found that 67% of buyers said that they were concerned about missing out on the property they really wanted because of an insufficient down payment, up from 57% just 4 years ago.

More than one third of respondents had received a lump sum from their parents or other relative to make the down payment and 25% received support on their monthly mortgage payments.

The poll included questions for real estate brokerage Royal LePage and CEO Phil Soper says that high interest rates, strict mortgage qualification standards, and difficulty saving enough money in a reasonable time period for a down payment are all challenging first-time buyers.

"That first transaction is the most difficult, and in today's environment, first-time buyers are faced with large price tags, high carrying costs and the added challenge of qualifying for lending at higher rates due to the stress test,” he said. “Still, they continue to prioritize home ownership, and view it as a milestone worth achieving.”

A recent survey showed that Canada’s Gen Zs are keen to buy homes as investments.

Delayed purchase

The stats show that Canadians are entering the housing market later.

Under 30s accounted for just 24% of first-time buyers in the 2023 survey compared to 29% in 2021. Those aged 30-34 accounted for 33% of buyers (down from 38%) while 43% of buyers were 35+ (up from 33%).

While there has been an historic trend for Canadians to buy a home later in life resulting from people spending more years in education and starting careers and getting married later, the latest stats suggest other factors are play.

“The fact that first-time buyers are entering the market older than they were just a few years ago is more directly linked to the increased cost of borrowing and the unprecedented home price appreciation we saw during the pandemic real estate boom,” concluded Soper.