New survey prompts mortgage payment concerns among homeowners
For many people, a new home is the biggest purchase they'll make in their lives.
Now, a new debt survey by Manulife Bank of Canada paints an unsettling picture for those hoping to settle down or stay in their current home.
"For now, with our mortgage payment, we're on a fixed for five years," said Sydney, N.S., homeowner Walter Doue, who bought a home in the city’s south end about three years ago.
Doue said, if his mortgage payment goes up significantly after his fixed rate expires, it will be tough to absorb.
"With everything else on the increase, you know, gas, food, everything, again, they're going to hit us with increasing our mortgage in a couple of years," Doue said.
Mark Morris is a real estate lawyer based in Toronto. He says after about a decade of relatively stable interest rates, some people will see their rates rise from fixed rates of about 1.5 per cent, to as high as four per cent if current trends continue.
"It is the case that, for many years, Canadians have not purchased a home - they've purchased a mortgage payment," Morris said. "Canadian home prices have become so excessive that there is no way that people can afford homes even with two high net worth individuals."
According to the Manulife survey, nearly one in four Canadians say they will have to sell their home if interest rates go up any further. The survey also found that 18 per cent of homeowners polled already can't afford their homes, and that two-thirds of Canadians don't view homeownership as affordable in their community.
Morris says first-time home buyers stand to be hit particularly hard, which in many cases will impact their parents too.
"First-time home buyers entering into this market almost always use the 'Bank of Mom and Dad,'" Morris said. “This means that mom and dad are as in hock as their kids."
Sydney real estate agent Valarie Sampson says, while there is some concern for first-time buyers, it's not all bad news.
"We have lots of inventory coming on now and people are realistic with their price points," she said.
Back in Sydney, Doue figures he's one of the lucky ones.
He and his spouse both work full-time, so they likely won't have to sell their home. However, he feels for others who might have to.
"They need to get this under control," Doue said. “You know, they've got some smart people up in Ottawa and some smart people in Halifax. So, let's get it fixed."
Meanwhile, the Bank of Canada is warning that people who bought a house in 2020 or 2021 could see their monthly mortgage payments go up by 30 per cent when they renew in five years.
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