The number of Canadians having difficulty making their monthly mortgage payments is on the rise, as are fears of facing higher payments when renewing a mortgage, show the results of a new survey.
About 15% of mortgage holders say they find the financial aspect of their mortgage “very difficult”, up from 8% in March and 11% in June, according to data released Monday by the Angus Reid Institute.
Although most observers expect the Bank of Canada to maintain its key interest rate at 5% when it announces its next decision on Wednesday, its current level has 79% of respondents saying they are worried or very worried about having to make higher payments when it comes time to renew their mortgage.
People with variable-rate mortgages were less likely than those with fixed-rate mortgages to find their monthly payments manageable at the moment, but respondents with variable-rate mortgages were also less likely to be “very worried” about their next mortgage or what their renewal might bring, compared to fixed-rate mortgage holders.
The evolution of the key rate does not matter
This pessimism is not a surprise, said James Laird, co-CEO of ratehub.ca and president of CanWise Financial.
But whether or not the Bank of Canada opts for the status quo this week, it still likely won’t allay the concerns of most borrowers, he continued.
“If it increased [son taux directeur] “Another 25 basis points, or let’s say, if it happened in the next six months, it wouldn’t be that big of a change,” Laird said.
“His comments will probably be more interesting than his decision on the rate. The bank sometimes gives us a good overview of what it thinks and what it plans to do in different scenarios for the coming months. »
The central bank kept its benchmark rate unchanged last month but left the door open to further rate hikes, citing concerns that underlying price pressures persist.
September’s Consumer Price Index report helped ease some concerns about inflation, which has slowed to 3.8% on an annual basis.
Tight budgets
Angus Reid data also shows that around half of respondents believe they are in a worse financial position than last year, while 35% expect to be in a worse position in a year’s time.
The online survey was conducted from October 9 to 13 among a representative randomized sample of 1,878 adult Canadian members of the Angus Reid Forum. The poll has a margin of error of plus or minus two percentage points, 19 times out of 20, the company said.
James Laird noted that while households were “obviously strained,” most Canadians were continuing to make their mortgage payments unless they had recently lost their job. But this means that “other important elements of the financial situation” of household budgets, such as savings, suffer, he added.
“I don’t want to say it’s easy, but it’s possible,” he said.
“The first dollar of every household’s budget goes toward housing payments, whether that’s a rent payment or a mortgage. Then other things get pushed out of the budget. Payments are still made on time, but there is less money left for other very important things like Registered Retirement Savings Plans (RRSPs) and Registered Education Savings Plans (RESPs) . »