The number of new mortgages dropped in the second quarter of 2019, with the country’s youngest homebuyers seeing the biggest decline, according to TransUnion’s latest Industry Insights Report.

TransUnion’s report showed that mortgage originations were down by 8.9% overall in Q2, while those among buyers aged 18-25 were down by 13.4% compared to last year. Mortgage originations have been down for the four consecutive quarters.

“While the mortgage market is affected by multiple factors, including house price growth, longer-term consumer sentiment, interest rates and unemployment levels, there can be no doubt regulatory changes have had a material impact on the Canadian mortgage market since early 2018,” the report said.

The youngest demographic of buyers is most affected by the stricter mortgage rules due to being at the early stages of their careers and having lower incomes compared to older cohorts. As a result, both their ability to qualify for a mortgage and the size of the mortgage they can obtain are limited. In many major Canadian housing markets, many young consumers have now been priced out of buying, the report said.

“The new mortgage regulations seem to be having the intended effect in cooling the overheated housing market and broadly preventing consumers from overextending themselves with mortgage debt,” said Matt Fabian, TransUnion’s director of financial services research and consulting.

However, Fabian said that there are signs of some potentially unintended consequences.

“We have started to see an uptick in co-borrowing as the means of getting a foothold on the property ladder, where multiple consumers make an application together — in effect combining the power of their salaries,” he said. “Although this is nothing new, it is now often with the help of a parent, other relative or a friend rather than just a partner or a spouse.”

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