A recent survey conducted by Rateshub.ca has unveiled the growing apprehension among Canadian homeowners regarding their mortgage payments due to the escalating interest rates. The data highlights that a significant 67% of homeowners express worry about meeting their mortgage obligations during their next renewal. Furthermore, 69% of respondents shared that the past two years have presented increased challenges in keeping up with their mortgage payments.
The survey delves into the financial adjustments made by homeowners in response to the higher interest rate environment. Penelope Graham, Director of Content at Rateshub.ca, emphasizes that individuals are actively seeking various options to alleviate the impact of these challenging conditions. "It’s evident that mortgage holders facing a more challenging rate environment upon renewal are exploring options to mitigate the impact – notably, nearly 29% say they plan to refinance their mortgage loans," she stated.
The survey discloses that 24% of homeowners contemplated downsizing their homes, while 29% considered the option of refinancing their mortgages. Other significant decisions included tightening budgets in different areas (54%) and contemplating a switch to an alternative lender to manage costs (17%).
Graham suggests that such decisions can effectively offset the impact of higher rates, whether by transitioning to a lender with more favorable term features, extending the amortization period, or utilizing built-up equity to cope with higher monthly payments. She also notes that the rise in mortgage rates is diminishing borrowers' spending power, signaling potential shifts in consumer behavior.
Breaking down the mortgage preferences among respondents, the survey reveals that 65.1% have a fixed mortgage rate, while 34.9% have opted for a variable mortgage rate. Looking ahead, Rateshub.ca projects that 62.6% of homeowners will choose a fixed mortgage rate upon renewal, while 37.8% will opt for a variable mortgage rate.
Graham sheds light on this trend, stating, "Fixed mortgage rates continue to be the most common choice for borrowers, even as rates have soared since early 2022. This reflects borrowers’ desire for stability in a volatile marketplace, even as expectations grow for lower variable rates in the near future."
The survey findings underscore the financial strain faced by Canadian homeowners as they grapple with the impact of increased interest rates on their mortgage payments. The diverse strategies adopted by homeowners to navigate these challenges reflect a proactive approach to financial management in an evolving economic landscape. As the real estate and financial sectors continue to witness fluctuations, homeowners are making informed decisions to safeguard their financial well-being.
