As interest rates continue to rise, so do anxieties about mortgage payments.
A new survey from RATESDOTCA and BNN Bloomberg revealed that more than half of Canadian homeowners with a mortgage are concerned about an increase in their payments upon renewal.
Last week, the Bank of Canada increased its overnight rate -- which controls the variable cost of borrowing -- yet again to 3.75%, with five-year terms offered by consumer lenders now in the range of 5%. While not directly impacted by the Bank of Canada, fixed rates have also been on the rise, climbing to over 5% as bond yields have soared in response to the central bank's hiking cycle.
Conducted by Leger, the survey revealed that, as a result of rate hikes, 53% of Canadians are concerned about their payments when it comes time to renew their mortgages. The good news is that -- despite the financial anxieties -- most respondents have a plan in place to deal with higher mortgage payments.
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Of those surveyed, 52% reporting they had a plan, with 38% of those saying they will cut back on their spending, 9% reporting that they’ll dip into their savings, and 2% saying they plan on taking on additional debt. Just 2% reported that that they would sell their home in response to higher rates.
Meanwhile, 20% of respondents said they don’t have a plan to deal with higher mortgage rates -- however, some don’t seem to care. Of these respondents, 14% said they were “concerned,” while 28% “were not concerned.”
The survey also asked respondents how likely they would be to shop around when it comes time to renew their mortgages. As it turns out, 51% said they did not plan to change lenders to get a better rate. Meanwhile, 9% said they didn’t even know it was an option.
The report comes at at a time when at least another rate hike is expected before the end of the year and when inflation is talking a major toll on the bank accounts of Canadians.