If Canadians were having difficulties affording their housing costs before, the latest interest rate hike -- which brought the Bank of Canada’s benchmark rate to 5% just last week -- is likely to tip many over the edge.
In fact, a new poll from Angus Reid Institute (ARI) shows that mortgage holders and renters alike are now “bracing for impact,” as rate realities continue to chip away at affordability.
According to ARI, 37% of Canadian mortgage holders are already having difficulties making their monthly payments. Within that group, the vast majority, at 89%, say the latest rate hike will “further exacerbate” their mortgage-related woes.
While 51% of mortgage holders say their monthly payments are currently “manageable,” 60% say that the latest rate boost “will negatively affect their ability to keep payments in this comfortable zone going forward.”
For renters, the sentiment is similar, with 45% reporting difficulties paying their monthly rent. Of that proportion, 63% anticipate their financial difficulties to worsen as an “indirect impact” of higher interest rates -- and more specifically, “as landlords often pass along increases to the cost of their mortgages.”
Moreover, says ARI, competition for rentals is only ramping up as 50% of respondents “eschew” big purchases, including home purchases, amid the escalating cost of mortgage borrowing. That figure is up from 43% in March 2023.
These latest insights from ARI are based on an online survey conducted between July 13 to July 17, 2023, and are representative of the sentiments of 1,600 Canadian adults who are members of the Angus Reid Forum.