Doubling Down: Resilient Canadians Face Mortgage Shift Since March

Since March, the Bank of Canada has upped interest rates twice, leading to a twofold increase in homeowners finding it hard to cover their monthly mortgage payments.

A recent Angus Reid Institute survey shows that now 15% of Canadian mortgage holders find managing the financial side of their living quite challenging, up from 8% in March.

Additionally, 30% find meeting these financial obligations "tough," up from 26% earlier in the year. On a brighter note, 47% find their monthly mortgage payments manageable, though down from 51% in March.

This online survey, carried out in early October, captured the sentiments of 1,878 Canadian adults.

The BoC has paused rate hikes for now, with potential cuts eyed for next spring, yet interest rates remain notably higher than when many entered their mortgage agreements.

From 2018 to 2020, rates stayed between 1% and 2%. Post-pandemic, they dipped to 0.25%, with promises of prolonged lows. However, March 2022 saw a swift rise to the current 5%.

Facing the common five-year mortgage term, Canadian homeowners who snagged low rates are now nearing renewal, with a drastically different rate landscape ahead.

Per Angus Reid's Economic Stress Index, half of Canadians with a year or less on their mortgage term are feeling the financial pinch. About 59% find their monthly payments hard to manage, with 57% fearing heftier costs upon renewal.

For those with one to two years left on their term, 48% are quite anxious about renewal, while 46% find it challenging or extremely difficult to meet their monthly payments.

With looming renewals, soaring interest rates, and rising living costs, household debt is now a pressing worry for mortgage holders. While 65% of all surveyed voiced stress over debt, this jumps to 81% among mortgage holders, with 33% marking it as a major worry. A mere 7% of them are debt-free, starkly contrasting with 44% of debt-free homeowners. Amid this backdrop, 49% of Canadians feel financially worse off than last year, and 35% dread a tougher year ahead. These sentiments match record highs in 13 years of Angus Reid's data, painting a concerning financial portrait.