Rents exceed saving capabilities for down payments

by Neil Sharma19 Jun 2019

Canadians spend too much money on rent and not only does that obstruct their abilities to save for down payments, it cuts into their rainy day funds.

“If you’re spending more than the 30% threshold on rent, it means your ability to save is less and your rainy day fund is diminished,” Jacob Black, managing editor at, told CREW. “Your ability to save for a down payment to buy a house is diminished, and it already affects your credit score because you have to dig into your credit card and lines of credit to pay for things that pop up.”

The Canada Mortgage and Housing Corporation recommends spending no more than 30% of monthly income on rent, but a RateSupermarket survey found 44% of Canadian renters spend more than a third of that on their rental accommodations, and 15% spend more than half.

Broken down by major cities, 34% of Torontonians spend more than a third of monthly income on rent, while the same applies to 33% of Montrealers and 30% of Vancouverites. Twenty-nine percent of Edmontonians, 27% of Calgarians and 22% of Ottawans spend more than a third of monthly income on rent.

“Two-thirds of the people who responded said they intend to purchase a new home in the near future, and among those, it was again renters who feel they’ll need to stretch their budget to afford a suitable home. Forty percent of renters expect to spend more than the one-third threshold, while 27% of homeowners still expect to pay more for their next home than they currently are,” read a report written by Black.

RateSupermarket also surveyed people about whether or not they expect to spend more money on an upgraded home purchase and in Vancouver—Canada’s priciest real estate market—residents didn’t seem too concerned.

“44% in Toronto said they’ll have to spend more money, whereas it was only 23% in Vancouver,” said Black. “Vancouver has found a ceiling for people being at their limit for what they can pay for a home. Vancouver is levelling out because people have maxed out what they can spend, but in Toronto there’s more movement and people are also anxious about getting on the property ladder.”


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