Rising interest rates and inflation have Canadians stressing about mortgage payments, survey suggests
80 per cent of Canadians holding mortgage find household debt a major source of stress: Angus Reid
Many people renewing their mortgage or on variable rates are feeling a sharp pain in their wallets right now due to higher interest rates and inflation.
Paula Gioino, a 40-year-old mother of three, started working as a microbiologist at the University of Saskatchewan, bringing her family income to $60,000 from $30,000 a year, just before the Bank of Canada began rapidly raising interest rates last year to lower inflation.
"We didn't know this was coming and I think that we're only staying afloat because I have that job now. I don't think we would be in a good position at this moment without my income," she said.
Gioino and her family got a $250,000 mortgage in August 2021. She said her monthly payments didn't increase because they were amortized to a longer term instead, but that means she could be making payments until she's 80 years old.
Despite the Bank of Canada holding the interest rate at five per cent, a recent survey by Angus Reid Institute revealed that 80 per cent of responding Canadians with a mortgage said their household debt is a major source of stress. Angus Reid surveyed 1,878 Canadians for a national margin of error of plus or minus two per cent, 19 times out of 20.
Meanwhile, 15 per cent of mortgage holders said it was "very difficult" to keep up with their monthly payments, up from eight per cent in March.
"The [fixed mortgage holders] were locked into a fixed term that was a bit more favourable four to five years ago, and now they're faced with much higher interest rates, which is causing a lot of pressure on them," Jon Roe, one of the researchers on the survey, said.
Roe said people with variable mortgages might've thought interest rates would be lower by now when they signed on.
"Now you're dealing with mortgage rates that have gone up significantly over time and perhaps you bought a house that maybe you wouldn't have bought if you knew that interest rates were going to be this high," he said.
The survey also found that the rising cost of living is a more prominent issue for respondents in Manitoba (74 per cent), Saskatchewan (73 per cent) and Alberta (60 per cent) than elsewhere in the country.
"People in Saskatchewan have kind of consistently fallen in the struggling category a lot more than in other provinces," he said.
Chris Kolinski, a mortgage broker in Saskatoon, said interest rates have risen extremely fast.
"Nothing that we've seen over the last 30 years," he said.
"[People are] struggling, right? And they need some relief and want their monthly payments to be lower. And so they're asking, how can I get my payment lower? If that's even an option right now," Kolinski said.
He said that people with fixed mortgages are feeling delayed anxiety, and those coming up for renewal are afraid that they are not going to qualify when it's time for renewal.
David Burlock, a Regina homeowner who saw a 40 per cent increase in his monthly mortgage payments, called it "absurd."
Burlock said he moved to Regina from Toronto so that he could buy a house for half a million dollars instead of a million, and even then had to settle for something less than than he would have liked due to the competitive market.
"It actually ended up working in our favour because then as interest rates increased, we were able to swallow it, and if we had bought a more expensive house, we're already being pushed pretty good right now. We would have been over the limit," he said.
Burlock said it was shocking to find out the monthly mortgage payments ended up being more than what they paid in rent for a house in Toronto.
Gerry Schiltroth, another mortgage associate, said there are better ways to go about buying a home, such as looking at a house or condo that costs less than your maximum budget.
"Maybe an adjustment of expectations of what you're actually buying," he said.
Both mortgage brokers agreed that it's never too late to reach out to a seek financial advice — whether you are young and trying to get your credit established or already struggling to make mortgage payments.
Gioino said that she continues to make frugal choices: being selective with activities for her kids, looking for the best deals at the grocery store and finding the cheapest phone plan.
"We are going through some rough times, and I think that especially for people that were not used to making smart choices with groceries and stuff like that, this is a learning time," she said.
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