Mortgages | Generational Comparison


There is often a ‘who had it better/worse’ debate when talking about the Baby Boomers versus the Millennial generation. It goes beyond the old, “I used to have to walk to school in the snow, uphill — both ways,” joke. Old and young are facing off in arenas like competing for jobs, arguing about social issues, and evolving politics. But one place where the Millennials seem to be winning the generational war (well, aside from the wealth of technology, though that could be a bad things sometimes too) is in the realm of mortgages. If you’re a Millennial looking for a Saskatoon condo, it has never been cheaper to obtain mortgages to get into a home.

In fact, the Millennials may be ahead financially in general. Research done by BMO suggests this younger generation is on firmer financial ground than their parents were in the 1980s. There’s a better job market with higher income potential. In comparison to the Baby Boomers (1946 to 1965), Millennials have a 93 percent chance of finding a job, compared with 90 percent of young Canadians job hunting in the mid-1980s.

Additionally, adjusted for inflation the median income of people aged 25 to 34 years was $33,900 in 1984-88 compared to $34,700 in 2011 for the same age group. Millennials can buy about 2 percent more goods and services than their parents could in 1984.

But the numbers are pretty telling in terms of mortgages. In 1986, the five-year fixed rate was 11.22 (on average). By 2010, it had dropped in half to 5.65%. And in 2015, just a few years later, that rate had dropped to an average of 4.67%. Like I said, there’s never been a better time to buy a house.

There’s also a marked difference in owning your own home as opposed to renting. Sure, you have to take on the responsibilities of upkeep, but that rent money you spend every month goes towards your own future in the form of investment equity. Many of those Baby Boomers are starting to sell the homes they bought in the 70s and 80s, downsizing with a great nest egg for their retirement. It seems like the right time to buy a house is — as soon as you can.

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