By the end of 2019, the debt to income ratio of homebuyers in Canada will be between 12% and 15%, compared with 4% for renters, according to a new study by Credit Suisse.
The increase in mortgage debt and the associated higher cost of living are likely to result in the continued expansion of the unaffordable housing crisis in Canada, says the Credit Suise analysis.
Credit Suiser research shows that a large share of the debt is for mortgages, and it expects the share of mortgages to increase from 20% in 2019 to 30% by 2023.
Credit card debt, meanwhile, will be the largest driver of the ratio, at 29% of the housing loan balance, according.
The ratio of mortgages is likely to increase even more as the number of mortgage applications will continue to grow.
The report points to a significant decrease in the share held by the private sector in the ratio since the late 1980s.
According to Credit Suisers data, private sector mortgage debt is estimated to have fallen by nearly half to just over $2 trillion by 2019, compared to the $7 trillion recorded in the late 1990s.
It says this decline in the debt held by investors is due to the recent economic downturn and the increased regulatory burdens that have been placed on mortgage lending.
The financial sector, on the other hand, is expected to be a major driver of debt in 2019, increasing its mortgage debt by $3 trillion, or 40% of its total assets, the report says.
“The increase in debt held in the private financial sector will lead to a decrease in equity in the housing market, with the resulting loss of investment in housing that can result in increased housing prices,” it said.
A large share The report predicts that the share holding the mortgage debt will increase from 40% in 2020 to 65% by 2024, while the share owned by the public sector will increase to about 70%.
“This is the largest share of housing debt held currently in Canada,” said Stephen Green, head of Credit Suises research.
“As a result, this is likely the largest housing loan to income gap in Canada.”
The report says that a significant share of home loans is for loans for the purchase of detached houses, where the buyer is typically the first person to pay off the loan.
The average cost of a house is expected at $2,200, but some homeowners are able to purchase their own home at much lower prices.
“While these buyers may not be able to afford to purchase a home on their own, the cost of the house can offset the lower cost of renting, and they may be able purchase a cheaper home,” said Green.
“In this scenario, the home loan balance will be at least 10% of income, as the homeowner would not have to pay mortgage repayments for the rest of their life.”
The analysis also shows that the proportion of mortgages held by borrowers who are aged 55 and older is likely going to increase by between 10% and 20%, while the proportion held by those aged 18 to 29 is likely increasing by at least 15%.
It also points to an increase in the average monthly payments for new mortgages by 10% to 15%.
This may be due to a rise in the number and complexity of the loans, with more borrowers requiring more information and documentation to make a loan application, and to qualify for lower interest rates, it said, noting that the number is likely set to rise.
“With the rising number of people needing help to pay their mortgage repayements, the rising cost of housing and the increasing number of applications for mortgage refinancing, there will likely be more people needing to take out a loan to finance a home purchase,” said Scott Laughlin, chief economist at Credit Suis.
“However, it is important to note that the mortgage repayment rate is not a direct measure of the affordability of a home.”
The credit score “The credit score is a critical determinant of how secure a home is, and a very important factor in making a mortgage,” said Dr. Robert Lautenbach, the co-author of the report.
“Credit scores are generally calculated using data from your bank or credit bureau, which is a riskier and more complex process than the mortgage application itself.
This risk has led to an increased reliance on credit scores in recent years, with many consumers choosing to apply to the credit scoring agencies to get their home loan approval.”
He said it is also likely that the growing popularity of online credit scores is to blame for this.
“We see a significant increase in home purchase applications using online credit scoring systems, and the numbers of applications are rising,” he said.
“This trend has led many consumers to consider the online credit score as an additional factor in their application.”
In addition to the increase in defaults, it says that the credit scores of borrowers with less than five years of debt will continue their steady decline, which in turn will lead more to be forced into default.
“Many of the lenders have taken steps to reduce the risk of