New mortgages in the second quarter declined by 3.4% this year compared to 2017, with younger borrowers backing away from the home market due to increasing values, new mortgage regulations, and hiking rates, according to credit reporting agency TransUnion.

Data revealed that there was a decline in millennial borrowers (aged 24 to 38) and Generation Z borrowers (aged 18-23) by 18% and 22%, respectively. Members of Generation Z account for a very minor percentage of mortgage holders, while over 11,600 fewer millennials either applied for new mortgages or renewed a mortgage over the quarter.

TransUnion said that the new, stricter mortgage rules are making a significant impact on the figures for new mortgages, considering that Canadians under the aforementioned groups are coming into the market for the first time and may have difficulty in affording the 20% down payment.

In an interview with CBC news, the agency explained further. "We think the drop is a combination of affordability and new rules – and for new rules it's a combination of less qualifying under new rules as well as a segment that perhaps qualify for less and are waiting it out for either home values to drop so they can afford more or waiting to save more of a down payment," said Matt Fabian, Director of Financial Services Research and Consulting for TransUnion Canada.

Borrowers are now required to pass the mortgage stress test to ensure that they can continue to pay their loans should rates increase further. In addition, the increased rates that have already happened are weighing down younger borrowers.

On the other side of the coin, though, mortgage borrowing among seniors (aged 73 to 93) rebounded over the same period. It is important to note that this particular age group maybe loaning for retirement or to assist younger relatives in owning a home, according to TransUnion.

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