A survey by Royal LePage estimates more than one million Canadian mortgages will come up for renewal this year with about 85 per cent of them secured when interest rates were rock bottom.
The survey found that more than half of those homeowners said they expect bad news when they renew and they anticipate their monthly payment will increase.
Twenty-two per cent say it will rise significantly and 81 per cent say the increase will put a financial strain on their household.
Many homeowners say that will cut into their spending on other things.
“Sixty per cent of respondents in the survey indicated they were gonna find a way to substantially reduce discretionary spending to cope with (the) impact of monthly payments,” Adil Dinani, a realtor with Royal LePage told Global News.
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Mortgage expert Angela Calla said anyone renewing their mortgage needs to take a look at their overall finances.
“It’s critical that you don’t sign the mortgage renewal prior to taking look at your overall financial circumstances, (and) learning which lenders will pay to bring your mortgage over,” she said.
According to the survey, more Canadians are looking to sign variable-rate mortgages upon renewal as interest rates continue to decline, but Calla said it is up to each individual to determine what works best for them.
In addition, Royal LePage said that as the trade conflict between the United States and Canada intensifies, the Bank of Canada may cut rates to stave off a potential recession.
“Even in challenging financial times, Canadians continue to prioritize home ownership and paying down their mortgages – cutting back on other spending, and even savings, if absolutely necessary,” Phil Soper, president and CEO of Royal LePage said in a statement.
“Delinquency rates in Canada remain extremely low, arguably the lowest among advanced economies worldwide, despite the rising cost of living and household debt. For example, the rate of mortgage default in the U.S. is more than fifteen times higher.”
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