There has been a sharp rise in the number of parents co-signing their adult children’s mortgage applications, data from the Bank of Canada shows.
Of all mortgages issued in Canada to first-time homebuyers here, the share of those that were co-signed by parents rose from around four per cent in 2004 to around 11 per cent in 2025, analysis from the Bank of Canada said on Tuesday.
“The practice is especially prevalent in Canada’s largest and most expensive housing markets, such as Toronto and Vancouver, where affordability pressures are most intense,” the report said.
Co‑signing is also more common among first‑time buyers who are younger and who have lower credit scores and lower incomes, it added.
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For some younger Canadians, it was the only way they could have afforded a mortgage in the first place.
The report found that in 74 per cent of the cases where the mortgages were co-signed, adult children would not have qualified for their mortgages without their parents signing on with them.
It also significantly boosted their purchasing power, the analysis found.
In 2022, the average adult who had their parent co-sign would have been able to afford a $458,000 home without co-signing. Having a parent co-sign meant they were able to afford, on average, a house worth $787,000, boosting their purchasing power by 72 per cent.
However, while co-signing can help younger Canadians afford a home, the report also warns that it can make them and their parents more financially vulnerable.
“Co‑signing enables many adult children to take on larger mortgages than they could afford on their own. Consequently, the financial positions of both the first‑time buyers and their parents matter,” the report said, adding that it can “leave both parties more vulnerable to a sharp deterioration in either party’s financial situation.”
The growing reliance on mortgage co‑signing “may represent an emerging vulnerability for the financial system.”
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