A study has found that young adults who live and reside outside of the most populous provinces, and in Ontario and Quebec, are feeling the most pressure compared to other age brackets whenever the Bank of Canada announces interest rate hikes. According to the poll conducted by Yahoo and Maru Public Opinion, 52 per cent reported experiencing anxiety due to higher borrowing costs.
Of the respondents who confirmed suffering money pressures, 51 per cent were found to be in the 18-to-34-year-old age range. This response was found to be most prevalent for those residing in Alberta, Atlantic Canada, British Columbia, Manitoba, and Saskatchewan. This is despite the respondents reportedly earning annual incomes of between $50,000 to $99,000.
48 per cent of respondents also confirmed that the increase in interest rates had not been a problem to cope with for themselves or their families. This is up from 43 per cent that gave a similar response to the same query a year ago.
A similar demographic of young adults under the age of 45 years was also found to have the strongest demand for the tax-free First Home Savings Account. While most banks are yet to start offering this option, the two that have already launched this offering, RBC and National, have reported a strong early uptake amongst young Canadians. Although neither bank has announced the exact figures for the number of accounts being opened, they both confirm that a significant number of account holders are in their 30s and are placing the maximum amount allowed.
However, it is not only borrowing costs that are an issue for young adults seeking housing. Even those who rent are finding it difficult to compete when their credit scores are not up to scratch. With the considerable shortfall of rentals in the country, there is serious competition when it comes to appealing to landlords.
According to Toronto real estate agent, Sundeep Bahl, landlords prefer credit scores that are upward of 700. This is despite a score of 660 and above being generally considered good, as per Equifax Canada. With many young adults in their early 20s lacking a credit history that would put them in this range, it is becoming tougher to secure housing.
The problem even extends to university students seeking housing and are still requested to provide a credit score on their rental applications. For undergraduate students, the problem is typically dealt with by having parents or guardians serve as guarantors on their applications. Graduate students are however more often required to already have good credit scores, even with a guarantor. International students from countries where credit scoring will tend to have more difficulty securing housing.
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