As interest rates in Canada continue to rise, a significant number of Canadian homeowners are grappling with unexpected and substantial increases in their monthly mortgage payments.
According to a new survey from the Real Estate and Mortgage Institute of Canada (REMIC), more than a third of these homeowners are now voicing regret over their current mortgage situations.
To gain insight into the sentiments of Canadian homeowners regarding their property investments, expenses, and mortgage adjustments, REMIC conducted a comprehensive online survey encompassing 1000 randomly selected respondents, which found that a noteworthy 34.1% of Canadians have expressed remorse about the mortgages they presently hold.
Among these respondents:
- 21.80% indicated that the relentless surge in interest rates has rendered their mortgage unaffordable
- 12.30% lament being locked into an unfavourable interest rate
What's more, 30.21% of Canadians acknowledged that they would have opted for a more budget-friendly property if they had foreseen the surge in mortgage rates.
A striking 59% of Canadians admitted their lack of knowledge regarding the prevailing interest rate in Canada.
When asked:
- 41.80% unequivocally stated their ignorance
- 17.20% were unsure and responded with a tentative ‘maybe'
The findings also revealed that a combined 68.4% of Canadians are uncertain about their mortgage payments in the event that the Canadian interest rate rises to the current rate of 5%. Specifically, 31.8% conceded their lack of knowledge, while an additional 36.6% expressed uncertainty.
When it came to feelings toward their banks, 57% of respondents said they relied on their banks to arrange their mortgages, while opinions on the competitiveness of bank mortgage rates were divided:
- 43.10% expressed uncertainty, responding with a ‘maybe’
- 10.5% confidently stated that banks indeed provide the best mortgage rates
Interestingly, 57.80% of Canadians believe that their loyalty as customers secures them favourable mortgage rates from banks. Within this group:
- 21.20% were convinced of this belief
- 36.60% held the view tentatively
A gender-based disparity emerged as well, with 56.0% of women entrusting banks for the best rates, compared to 43.90% of men.
Joe White, President and CEO of REMIC, cautioned against blind faith in banks, emphasizing the significance of considering one’s quality of life and striking a balance between property acquisition and financial well-being.
“Canadians believe that a bank would never give them a mortgage that they can’t afford, but is a bank really concerned about your quality of life and factoring that into the monthly mortgage calculation? We teach that mortgage brokers need to go further. The best brokers will advise with balance between purchasing a property and a reasonable quality of life. A homeowner who qualifies at a bank with great credit can do very well with a mortgage broker and get a very competitive rate.”
As for paying off their mortgages, 45.2% of respondents anticipate paying off their mortgages by the age of 60, while further insights reveal that:
- 8.2% foresee being mortgage-free at age 80 or older
- 4.60% anticipate achieving this at age 75
- 8.20% optimistically estimate mortgage clearance by age 70
- 12% candidly admit uncertainty regarding their payoff timeline
More than half (58.22%) of respondents confessed an inability to recollect their precise monthly mortgage payments without referring to records.
“Buying a home is an exciting, emotional and adrenaline-filled process,” added White. “60-90 days after a purchase, the homebuyer’s adrenaline can turn to regret if they’ve overextended themselves and it can become a place that they sleep at and pay off forever. A home is the last thing that Canadian homeowners would default on because their families need a roof over their heads."
White said the survey results suggest that Canadian homebuyers need to educate themselves further on the basics of taking on a mortgage and its lasting financial impact.
"This is exactly the kind of information that they would be getting from a licensed mortgage broker and a big part of the advantage of using a broker to secure a mortgage,” added White.
