Canada’s Aging Population May Slow Mortgage Demand Growth

Ottawa | October 4, 2025, 11:30 IST — Filed via MPA Magazine insights

Canada’s housing and mortgage markets are entering a demographic turning point. With population growth slowing and the country’s median age rising, experts warn that long-term demand dynamics for mortgages could shift, affecting both lenders and borrowers.

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Slowing Immigration and Growth

Immigration has long been Canada’s growth engine, propping up housing demand and fueling mortgage lending volumes. But with federal immigration targets trimmed for 2025—from 500,000 new arrivals to 395,000—the pace of population growth is set to slow to its weakest level since the pandemic years.

This means fewer new households entering the market, potentially easing upward price pressures in some cities, though the impact will vary regionally.

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The Aging Factor

Canada’s median age is now above 42 years, and projections suggest it will climb further through the next decade.

• Older households are more likely to be mortgage-free or close to paying off their loans.
• They also tend to downsize, reducing demand for larger homes and long-term mortgages.
• At the same time, retirees may prefer fixed-income investments, influencing capital flows into housing finance.

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Regional Effects

The demographic shift will not hit all markets equally.

• Toronto and Vancouver, still magnets for immigration, may continue to see robust demand for starter homes and condos.
• Smaller towns and rural areas, however, could feel the slowdown more acutely, with limited buyer inflows and aging residents reducing housing turnover.

Mortgage professionals expect lenders to adjust product strategies—offering more flexible retirement-friendly solutions, reverse mortgages, and shorter amortization periods.

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What It Means for Borrowers and Lenders

For borrowers, slower demand growth could mean more stable price trends, offering relief in overheated markets. But for lenders, it raises questions about growth potential in mortgage portfolios.

Financial institutions are already exploring new revenue sources, including insurance cross-selling, investment products, and specialized mortgages tailored for seniors.

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Outlook

While the Bank of Canada’s recent rate cut to 2.50% has eased short-term affordability stress, the bigger story may be structural. An aging population combined with lower immigration means the Canadian mortgage market may expand more slowly, forcing lenders and policymakers to adapt.

For homeowners, the shift could bring both challenges—such as slower equity growth—and opportunities, including more balanced housing prices in some regions.