Almost half of all Canadians who renewed their mortgages this year have seen housing costs balloon to more than half their paycheque, a new survey by rate comparison website Rates.ca has found.
Canada is in the midst of its largest wave of mortgage renewals, with many Canadians seeing their housing budgets go up.
Borrowing costs have gone up for 82 per cent of Canadians whose mortgages were renewed since January, a survey commissioned by Rates.ca and conducted by Leger from July 24 to 26 found.
Most people saw their mortgage rates rise between two and 4.99 per cent, the survey said.
Nearly half (45 per cent) of households that renewed their mortgage say those payments now consume half or more than half of their entire household budget, it added.
Many financial institutions and experts say that the share of housing costs should not exceed 30 per cent of your household budget, including utilities.
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“No more than 30% to 32% of your gross annual income should go to mortgage expenses, such as principal, interest, property taxes, heating costs and condo fees,” the Royal Bank of Canada says on its website.
“These findings show just how little financial flexibility some homeowners have after renewing,” said Victor Tran, Rates.ca mortgage and real estate expert.
“When half or more of a household’s monthly budget is going toward the mortgage, there’s much less room to absorb other expenses or an unexpected financial setback,” Tran added.
While mortgage costs rose across the board for most Canadians renewing this year, younger homeowners were hit the hardest.
Nine in 10 homeowners (90 per cent) aged between 18 and 34 years renewed their mortgages at a higher rate, with 56 per cent of those saying their housing costs now account for 50 to 70 per cent of their household budget.
Foreign-born homeowners had a similar proportion (50 to 70 per cent) of housing costs to household budgets, compared to Canadian-born owners (35 per cent).
Four in 10 (40 per cent) of all homeowners who renewed this year chose to lock in their mortgage for five years, while 35 per cent chose three-year terms. Only seven per cent locked in their mortgage for more than five years, the survey found.
Homeowners should start shopping ahead of their expected renewal date, Tran said.
“Homeowners approaching renewal should start reviewing their options at least 120 days in advance, giving them time to shop around and consider the rate, term, amortization and flexibility that best fit their budget,” he said.
Blame the greedy Bank of Canada/Government. They’ll forever have their hands in our pockets. It’s not just the Liberals, but the Conservatives would be just as bad or worse if they were in power.
This where the federal government could step in and help Canadians not only would it off set costs for homeowners, but it would make rents more affordable because landlords wouldn’t have to increase rents to cover increased costs. Yet the federal liberals and bc NDP have chosen to use taxpayer funds to bailout developers by buying up 2200 condos so they dont lose out on their investments. Canadians are losing out and giving more money to bank CEOs while they can’t afford basic needs. The Liberal government works for corporations and should be investigated for making life more unaffordable for the average Canadian while lining the pockets of their friends and insiders invested in the housing market.
Well, that’s what happens when you purchase beyond your budget. Did you all seriously think that mortgage rates would remain the same forever?
There seems to be a discrepency between Gross income (before tax) and household budget which would be after tax.
The same people that are complaining are the people that keep voting liberal. Nobody to blame but themselves.
Mark Carney and Trudeau will forever be a stain on this countries history, what a disgrace.
Add groceries of top of that for a young family, and nothing is left.
“Elizabeth” must start drinking early in the day…
Everyone wants housing to be more affordable except the people who already own homes. Only way home prices drop is more supply at a reduced price which puts pressure on current home prices. The over 55 crowd, who statistically own most of the single homes, will never support a govt if they see their equity go down.
I hope that most of the foreclosures impact those who voted for Carney.
of course ,so the liberal government can spencer millions of immigrants and give away billions to ever other country but Canada
Taxed to death Canadians??
Our interest rates are lower than the USA, thanks to the top notch economic management courtesy of the Carney government.
But yet the Liberals and their base will still say everything is fine and back them even after a decade plus of them in power, absolutely no accountability. They will deflect and blame everything else but their innate ability to govern efficiently.
The carney effect
What horrifically skewed data.