Millennials Brace for Economic Pain

by Allen Ehlert | May 2, 2025

As the economy cools and interest rates rise, a new report from RBC warns that millennials and young Gen X homeowners could face significant financial challenges. High debt and vulnerability to a potential economic downturn are raising concerns about the ability of young workers to maintain employment and make mortgage payments. With the potential for mortgage payments to increase by 25% next year, the housing market is also a cause for concern. In this blog post, we dive deeper into the findings of the RBC report and explore the implications for millennials.

The Rising Debt Burden

Millennials in Canada are carrying the largest debt load, making them particularly vulnerable to any shifts in the economy. With high levels of student loan debt combined with rising home prices, millennials are finding it increasingly difficult to manage their finances. The report from RBC highlights the potential consequences of this debt burden, including the risk of foreclosure if full-time employment is lost.

Impact of Variable Interest Rates

Variable interest rates have hit millennials hard, but many have managed to keep up with their mortgage payments or refinance at lower rates. However, if the economy cools down and millennials lose full-time employment, banks may be forced to foreclose on houses. This could have a substantial impact on the housing market, with the potential for prices to decline and sales to slow down.

The Housing Market Concerns

The RBC report also raises concerns about the current state of the housing market and the potential for a collapse or correction. Despite record immigration numbers, the housing market remains supply-constrained, leading to high prices and affordability issues. Uncertainty surrounds when a major correction will occur and how it will impact millennials who are heavily invested in the market.

The RBC report paints a challenging picture for millennials in the months ahead. The combination of high debt, potential job losses, and a volatile housing market creates significant economic pain for this generation.

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Allen Ehlert

Allen Ehlert is a licensed mortgage agent. He has four university degrees, including two Masters degrees, and specializes in real estate finance, development, and investing. Allen Ehlert has decades of independent consulting experience for companies and governments, including the Ontario Real Estate Association, Deloitte, City of Toronto, Enbridge, and the Ministry of Finance.

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