Debt is dragging down Canadian millennials

Young Canadians are carrying much more mortgage debt than previous generations, putting them at risk of sinking under the strain of skyrocketing home prices

Andrew Willis 26 April, 2019 | 2:00PM

Canadian millennials are stuck with slow wage growth, a widening wealth gap and mortgages that are multiples of their income, a recent Statistics Canada study revealed. These three factors are making it difficult for young Canadians to get their financial footing, but their mortgage levels are the main cause for alarm.

When compared to previous generations, millennials are facing a debt drag of a magnitude “considerably higher”, at 250% of their income levels today. Young Gen-Xers carried mortgages at 180% their income levels, while boomers were the best off, with the weight of a mortgage equivalent to their income.

The study found that those millennials that had been able to purchase a home were better off than ever before. Millennials that hadn’t been able to make a mortgage sat near the bottom end of a wealth gap that’s doubled in width since the Gen-X generation, now at $9,500 for the bottom 25% and $253,900 owned by the top 25%.

As Canada traverses uncharted economic territory, young Canadians should strive to fortify their financial houses – even if they don’t own a home.

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Andrew Willis

Andrew Willis  Andrew Willis is a content editor for Morningstar.ca.