If the Bank of Canada continues to raise interest rates, one-third of mortgage holders would be forced to make a significant life change, like picking up a second job or selling their home.

The worrisome statistic is the result of a new survey commissioned by WealthRocket, which found that if rates are raised even once more, 35% of Canadian mortgage holders would need to make a consequential change to their financial situation. The survey was conducted online by Angus Reid at the end of September and included responses from 1,504 Canadians.

In order to make ends meet, respondents indicated they would need to get another job, extend their amortization period, or break their mortgage altogether. Others said they would need to rent out all or part of their home, and some would be forced to sell.

The percentage of mortgage holders who would be faced with such decisions in the face of another rate hike is highest in Ontario, at 37%, while those in Western Canada are slightly more immune, at 33%.

"People are likely to have wishful thinking that interest rates will come down, and that they just need to keep waiting it out," said David O’Leary, CFA charterholder and personal finance expert at WealthRocket. "That may happen, but it also may not happen nearly fast enough."

The Bank of Canada’s next interest rate decision is set for October 25. With growing signs of an economic slowdown and inflation having eased in September, economists predict the BoC will pause interest rates at 5%. However, if forthcoming data doesn’t cooperate, another rate hike may still be delivered at a later date.

Beyond the potential impact of even higher rates, the survey also found that nearly one-third of mortgage holders are spending 40% or more of their gross monthly income on housing. According to standards set out by the Canada Mortgage and Housing Corporation (CMHC), the figure should not exceed 39%.

Again, the percentage of Canadians who exceed the CMHC standard is highest in Ontario, at 38%. Younger Canadians are also more likely to spend a higher percentage of their income on housing — of those aged 18 to 34, 37% surpass the standard, compared to just 26% of those aged 55 and older.

As O’Leary points out, though, the latter statistic is "no surprise," as younger homeowners have had less time to save and typically have lower incomes — likely resulting in a lower downpayment — and have had less time to pay down their mortgage.

To cover said mortgage, 36% of dual-income homeowners funnel one partner’s entire income towards their monthly payments, while the other’s is used for remaining housing costs, like utilities and condo fees. For 27% of respondents, one partner’s income covers all housing costs, including mortgage payments.

Amongst sole homeowners, 16% are able to afford all their housing costs, including their mortgage payment, with their own income, but 3% utilize credit to cover non-mortgage costs.

Regardless of whether interest rates rise, anxieties are high among mortgage holders. A survey from Zolo found that one-fifth of homeowners "worry all the time" about their ability to afford their mortgage upon renewal, and a poll from Leger revealed that more than half of Canadians have been concerned about being able to pay their mortgage or their rent over the last few months.

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