A new survey by Equifax reports that one in five young adults admitted to lying on a loan application for a mortgage. This isn’t too surprising, given there’s a vast amount of social pressure placed on Canadians – both young and old – to own their own home.
Also known as “Generation Squeeze,” a report by the same name paints a troubling portrait of millennials attempting to shrink the gap between the huge cost of home ownership and their average earnings. CTVNews reported that in order for houses to be affordable, they would literally have to drop in price by half the cost – approximately $223,000.
Equinox found that 23 per cent of millennials say it’s okay to lie about their income on a mortgage application – that’s double the per cent of the general population. Perhaps lying is a delay tactic against the inevitable – not being able to afford the upcoming mortgage payments. Or maybe there’s some alternate plan at work – something they can’t legitimately put down on the application itself. This could be, for example, an imagined room they envision in their future house to rent out for profit as an Airbnb.
It’s the desperation that’s so startling. Equifax found that millennials’ comfort with lying increased by 9 per cent compared to the same survey given five years ago. Julie Kuzmic, Director of Consumer Advocacy at Equifax Canada, told HuffPostCanada: “People are concerned they might miss out, and if they don’t qualify for the home they’re hoping for, they may never be able to buy a home.” The survey also noted that 61 per cent of respondents blamed foreign buyers for inflated market prices.
There’s also growing resentment towards the government constraints against home ownership introduced in 2018. The B-20 mortgage stress test requires owners to plunk down at least 20 per cent for a down payment and they need to qualify at the Bank of Canada’s five-year benchmark rate or tack 2 per cent onto their contract rate – whichever is higher.
Millennials have perceived this as a lock-out scenario and, essentially, too harsh. The Equifax survey also revealed that 78 per cent of young people believe the government should help home buyers with 70 per cent, saying that the focus should be on first-time buyers. With the obstacles to home ownership accumulating, many millennials feel, as Vice put it, “tortured” by the entire process and pressures involved.
“People might see themselves as a responsible borrower, they may feel lender guidelines are too strict, that they would be fine carrying a higher amount of debt,” Kuzmic told HuffPost Canada.
“One of the things that doesn’t occur to people right away is the risk of higher interest rates. … There is (also) a risk that the person will have unexpected expenses, that homeownership turns out to be more expensive than they expected. … And that’s not to include some of the more catastrophic events like job loss or health issues.”
Maybe we need to glamorize the whole renting lifestyle again. Toronto Life managed to do it in 2016.
In the meantime, the cult of home ownership lives on.