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% annually.

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

Despite leading mortgage originations in Q3-2021, Gen Z makes up just 4% of the total origination market, followed by Baby Boomers, Gen X and Millennials at 16%, 37% and 43%.

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% yearly to $320,835 according to TransUnion. In Q3-2021, average new account balances jumped 19% from 2020 to $386,026.

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

Rising property prices continue to be one of the biggest roadblocks for those looking to enter homeownership. 44% of respondents said that high home values were a barrier to homeownership according to TransUnion’s most recent Consumer Pulse study. 42% cited not having enough for a down payment as their biggest hurdle, while 30% 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% 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% increase in credit participation from the previous year. Credit card spend rates were up 20% 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.

How Gen Z Mortgage Seekers are Getting In on Canada’s Market? by Michelle McNally | Livabl