How long do Canadians need to save up for their minimal mortgage down payment?

According to the recent report by the National Bank of Canada, an average Canadian household needs about 60 months in order to save up for a minimum mortgage down payment.

The calculation is based on a 10% savings rate and a 6% down payment. Such a result is the longest period seen in almost 40 years. Moreover, it exceeds the previous record reported during the housing bubble of the 1990s significantly.

Meanwhile, we’ve seen strong improvements of a household purchasing power over the previous few quarters.

“Nationally, it’s the worst time to save up for a minimum down payment,” – National Bank economists Kyle Dahms and Camille Baillargeon noted. “Higher incomes and historically low interest rates were almost entirely offset by a sharp real estate prices increase.”

With the pace home prices growth showed in multiple Canadian housing markets over the second half of the last year, that growth will hardly stop in the nearest future. CIBC predicts an 11.2% average prices gain in 2021, while RBC expects an 8.9% increase.

“The pandemic changed certain market dynamics. For instance, many buyers switched to the suburbs or even beyond, the immigration almost stopped, large cities faced a downturn at rental markets, and households were able to build up their savings. However, the market didn’t cool down”, – says RBC economist Robert Hogue. “We believe this trend will remain this year”.