Despite higher home prices and tougher mortgage qualification rules, determined Canadians are still looking for ways to break into the housing market. Whether through co-ownership, parental support, or moving to more affordable regions, buyers are getting creative to make their homeownership dreams a reality. 

The Canada Mortgage and Housing Corporation (CMHC) recently released its 2025 Mortgage Consumer Survey, which surveyed 3,968 first-time buyers, renewers, refinancers, or repeat buyers about their views on homeownership and mortgages in Canada. This survey sheds light on the state of the housing market and how buyers are strategizing to become homeowners. 

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Key Takeaways

• Canadian homebuyers are more optimistic that buying a home is a good investment. 
• Many Canadians are turning to non-traditional home purchase methods as prices remain high. 
• The rise of digital platforms has made it easier for homebuyers to shop for rates and get a mortgage pre-approval.

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Market Trends and Buyer Behaviours

According to the latest 2025 Mortgage Consumer Survey from CMHC, market trends indicate a clear shift in how Canadians approach homebuying. This year, many Canadians are more confident about their home purchase being a good investment than those surveyed last year. Meanwhile, 74% believe the value of their home will increase in the next 12 months, up from 65% in 2024. 

Market Uncertainty Remains

However, market uncertainty is still high, with 62% of those surveyed citing their top concerns that they may be paying too much for a home (47%), living with post-homebuying costs (44%), and interest rate increases (40%). Default concerns also remain elevated, with 53% concerned about defaulting on their mortgage. The leading cause of these concerns is based on economic reasons (70%), such as cost-of-living increases, economic recession, and an increase in interest rates. 

Renewers a Large Portion of Mortgage Consumers

The majority (65%) of respondents were renewers, rising from 58% in 2023 and 62% in 2024. This represents a significant share of Canada’s mortgage market, with many of those borrowers coming off historically low fixed rates and facing substantial increases to their mortgage payments at renewal. 

Refinancers comprised 18% of the mortgage landscape, with tapping into equity for home improvements or renovations remaining one of the top reasons borrowers refinance. First-time buyers saw a modest increase to 12% from 10% in 2024, while repeat buyers fell to 5% compared to 8% in 2024, suggesting that existing homeowners may be more hesitant to move or upgrade due to the current market and economic environment.

First-Time Homebuyer Trends

First-time homebuyers in Canada are navigating a challenging affordability landscape by adapting their living and purchasing arrangements in new ways. 35% of first-time buyers purchased their first home while living with friends or family, likely as a way to save more aggressively for a down payment. 

Among those who rented before buying, the average rental period was 6.3 years, reflecting the prolonged financial preparation required before leaping into homeownership. However, from those surveyed, the average time they saved for a down payment was 3.7 years. The financial stretch is also evident in how much buyers are willing to commit: 65% of first-time purchasers said they spent the maximum amount they could afford on their home. 

Co-ownership on the Rise

More than half of all first-time buyers purchased with someone other than a partner or spouse, and this trend is even more pronounced among those aged 18 to 24. This suggests a growing openness to co-ownership models as a practical solution to affordability barriers. 

These shifts point to a new era of collaboration and financial creativity among first-time buyers, where flexibility in relationships and living arrangements is sometimes key to stepping onto the property ladder.

Impact of Interest Rates on Homebuying

Interest rates significantly affect home affordability and a homebuyer’s budget. Higher interest rates reduce buying power, meaning you qualify for less when interest rates are higher. This highlights the importance of shopping around for the best mortgage rates. 

Shopping around can save you considerable interest-carrying costs, especially during your first term, when you pay more interest than principal with your mortgage payments. Even a small difference in the interest rate can equal significant savings over your mortgage term. Securing a lower interest rate can reduce mortgage payments, lower debt service ratios, and help you qualify for more. 

Impact of Interest Rates on Mortgage Payments and Interest

The table below illustrates the cost savings of choosing a slightly lower rate on your monthly mortgage payments and the amount of interest you pay. Selecting the lower rate lowers your monthly payments by approximately $159 and saves you roughly $13,957 in interest over a 5-year term on a $650,000 mortgage with a 25-year amortization.

Interest Rate	3.84%	4.29%
Monthly Mortgage Payments	$3,362.99	$3,522.08
Total Term Interest Paid	$116,042.18	$129,999.33
Total Term Principal Paid	$85,737.07	$81,325.54
Total Savings (Interest)	$13,957.15

Impact of Interest Rates on Affordability

The table below illustrates the impact on affordability based on the interest rate you are offered. Using the lower interest rate, we assume you qualify for a maximum mortgage of $650,000, with a 20% down payment for a total purchase price of $812,500 on a 25-year amortization. 

With a higher interest rate, you qualify for less, impacting your purchasing power by $68,258. If you want to purchase the same home at a higher rate, you must increase your down payment by the shortfall to make up the difference. You could extend the amortization to 30 years to offset the impact of a higher rate, but this would come at the cost of paying more interest over the life of the mortgage. 

A higher interest rate reduces the size of the mortgage you can carry, directly lowering the maximum price of the home you can afford, even if your income and down payment stay the same. This rate difference can mean choosing between buying in a preferred neighbourhood or compromising on location, size, or features.

Interest Rate	3.84%	4.29%
Maximum Purchase Price	$812,500	$744,242
Down payment	$162,500 (20%)	$162,500 (22%)
Maximum Mortgage	$650,000	$581,742
Difference in Purchasing Power	$68,258

Strategies to Navigate Higher Interest Rates

Many Canadian homebuyers are adjusting their approach to stay within budget as high home prices and interest rates impact affordability. From choosing longer amortizations to locking in rate holds early, strategic planning has become essential to maintain affordability in today’s market.

Create a Financial Plan

Whether you’re a first-time or seasoned buyer, creating a budget can help you understand how your money is allocated each month, helping you stay on track with spending and savings. Having a budget can also help you determine areas of discretionary spending that you could cut back on to help boost your savings and prepare for potential future rate increases. 

Building an emergency fund can help you plan for the future. Having one readily available can give you a buffer to fall back on and help weather any changes to your financial situation. 

Additionally, having a financial plan and making timely bill payments will help you improve your credit score. A higher credit score can help you secure the best interest rates, which will help you save money on interest over the life of your mortgage. 

Choose the Best Mortgage Type

A fixed-rate mortgage locks in the interest rate for a set amount of time, offering stability in mortgage payments. If interest rates increase during your term, your rate will remain stable. This helps you budget for this significant expense. 

A variable mortgage may also be a suitable option if its anticipated interest rates will fall over your term, helping you realize immediate savings on the interest-carrying costs. However, this comes with some risks, especially if your budget doesn’t have much wiggle room for fluctuations in your fixed expenses. 

If interest rates increase, your payments will immediately increase if you have an adjustable-rate mortgage (ARM), or more of your payment will go to interest and less to principal if you have a variable-rate mortgage (VRM), as your payment is fixed, putting you at risk of negative amortization.  

In 2025: 

• 62% chose a fixed rate,
• 25% chose a variable rate,
• 9% chose a combination of fixed and variable.

Refinance

If you are already a homeowner, refinancing into a lower interest rate can help you realize immediate cost savings on the interest portion of your mortgage payments. With this option, it’s important to compare the cost to break your current mortgage term, understand any potential fees, and compare those to the potential savings to ensure you are coming out ahead. 

If you recently had to renew at a higher interest rate or are up for renewal soon, a refinance to extend your amortization could help lower your mortgage payments. While this option will help you reduce your mortgage payments now, it will come at the cost of more interest over the life of the mortgage. 

How Homebuyers are Saving to Afford Homes

Housing affordability continues to be an issue for many Canadians. While the minimum down payment is 5%, many prospective homeowners must put down much more than that to afford the average-priced home. This is especially true in hot markets like Toronto and Vancouver, where home prices regularly exceed $1 million, requiring a higher down payment to increase purchasing power.  

Homebuyers said they had to save an average of 3.4 years for their down payment, compared to 4.2 years in 2024.

To afford a higher down payment, more and more Canadians are turning to family to help fund their down payments. According to CMHC’s survey, 35% of buyers received gifts or inheritances that they used for their down payment, with the average amounting to $79,127. 

78% of those who received gifts to fund their down payment said they could have purchased without the help, with some concessions. 

The survey also shows that many buyers are not fully taking advantage of the tax-free accounts offered to save for their down payments. Only 38% of first-time buyers used the First Home Savings Account (FHSA) as a source for their down payment. Meanwhile, 80% of first-time buyers were aware of the account, with 71% saying they are participating in the program. 

Creative Homebuying: The Rise of Joint Purchases

Non-traditional homeownership models are gaining traction, offering creative solutions for prospective buyers facing high property prices and interest rates. If you’ve considered purchasing a home with your friends or a family member, you’re not alone. 

More than half of first-time buyers (54%) shared a home purchase with someone who was not a partner or spouse. This number increased to 64% for those aged 18-24, highlighting the shift in buyer behaviours among younger buyers to get on the property ladder. 

A Third of Canadians Explore Alternative Ownership Models

A Re/Max Canada survey of 1,522 Canadians from 2024 highlighted that 32% of Canadians were exploring alternative ways to enter the housing market due to economic factors such as the high cost of living, interest rates, and housing prices. 

Of those who considered alternative home ownership models, 22% would choose rent-to-own, 21% would consider co-ownership with a family member who isn’t a spouse or partner, and 17% would consider purchasing a home to live in with additional space they could rent to someone else.

The Role of Technology in Shopping for a Home

Technology plays a big part in our everyday lives, from work to leisure, so it’s no surprise that it is also shaping how prospective buyers search for a home and get a mortgage. Technology in the real estate industry has revolutionized how people search for properties and obtain financing. Prospective buyers can now browse numerous online listings, view virtual home tours, and even apply for a mortgage through digital platforms like nesto. 

Of those surveyed by CMHC, 77% of mortgage consumers researched online for mortgage information. 

The top sources for online research were: 

• lender websites (44%), 
• mortgage broker websites (38%), 
• interest rate comparison sites (38%), 
• real estate listing sites (26%), 
• and the CMHC website (35%).

Most mortgage consumers doing research online were comparing rates (85%). Meanwhile, 47% submitted an online mortgage pre-qualification or pre-approval application. This has made the homebuying process more convenient and expanded the options available to buyers, allowing them to explore a wider range of properties and financing options all from the comfort of home. This trend underscores the importance of digital platforms today in the homebuying process.

Frequently Asked Questions

Final Thoughts

Economic and technological advancements significantly shape buyer behaviours and market trends. The varied impact of interest rates across regions, coupled with generational shifts in how buyers get into homeownership, underscores the dynamic nature of the market. 

The emergence of non-traditional homeownership models and the pivotal role of technology offer new and creative solutions for current and prospective buyers. These trends illustrate a market that is evolving and adapting to modern demands. 

nesto’s digital platform streamlines the mortgage application process from start to finish and provides a comprehensive overview of your financing options from the comfort of your home. Contact a nesto mortgage expert today to find your most suitable mortgage strategy.

Why Choose nesto

At nesto, our commission-free mortgage experts, certified in multiple provinces, provide exceptional advice and service that exceeds industry standards. Our mortgage experts are non-commissioned, salaried employees who provide impartial guidance on mortgage options tailored to your needs and are evaluated based on client satisfaction and advice quality. nesto aims to transform the mortgage industry by providing honest advice and competitive rates using a 100% fully digital, transparent, seamless process.

nesto is on a mission to offer a positive, empowering and transparent property financing experience – simplified from start to finish.

Contact our licensed and knowledgeable mortgage experts to find your best mortgage rate in Canada.

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