Canadian Homeowners Worried about their Finances – 50% Bought Real Estate During Covid

Real Estate
#CanadaRealEstate #CanadianRealEstate #TorontoRealEstate

40% of Canadian homeowners are worried about their finances, with 50% of those having purchased real estate during the pandemic. While many bought into Canada’s real estate market during the height of the pandemic, due in large part to FOMO, some may be regretting the larger mortgage payments that came therefrom.

With 26% of homeowners unable to handle an extra $200 in monthly obligations, and 45% being able to handle an extra $500, the interest rate hikes coming from the Bank of Canada are definitely of concern.

Variable rates were at an all-time low in July of 2021 when their hit their peak of Prime minus 1.4, increasing rates from the Bank of Canada may indeed be increasing those mortgage payments to near-unmanageable level.

If holders of these variable rate mortgages become unable to manage their payment we could see a flood of new homes come to market in short order. As Canada’s real estate market is already starting to reverse, this would only put more downward pressure on prices, which very well could snowball.

NOTE: Calculations on the average price were completed at $661,000 in July, when the average price was actually $662,000 – The difference in payments is less than $10.

LINKS:

See the Full Leger Poll at: Nearly 40% of homeowners are concerned about their finances, half of whom bought during the pandemic: survey:

https://rates.ca/resources/canadian-homeowners-concerned-finances

Average Canadian home price hits record $816K in February, rising 20% since last year:

https://www.ctvnews.ca/business/average-canadian-home-price-hits-record-816k-in-february-rising-20-since-last-year-1.5819703

Canadian home buyers pile into variable loans, blunting impact of rising fixed rates:

https://financialpost.com/real-estate/mortgages/canadian-home-buyers-pile-into-variable-loans-blunting-impact-of-rising-fixed-rates

Economists forecast rates will jump by another half percentage point next week — cooling Canada’s housing market even more:

https://www.thestar.com/business/2022/05/27/a-real-squeeze-economists-anticipate-higher-interest-rates-coming-next-week.html

Monthly payment for new mortgage on a typical home is up nearly $800 from October, one analysis shows:

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https://www.theglobeandmail.com/investing/personal-finance/household-finances/article-increasing-mortgage-payment-affordability/

Bank of Canada 50-basis-point June 1 hike a done deal, economists say:

https://www.theglobeandmail.com/business/economy/interest-rates/article-bank-of-canada-50-basis-point-june-1-hike-a-done-deal-economists-say/

Canadian home sales slipped 3% in July while average price fell to $662,000:

https://www.cbc.ca/news/business/housing-realtor-canada-1.6142201

The lowest 5-year variable-rate mortgage in Canadian history is here:

https://ca.finance.yahoo.com/news/the-lowest-variable-rate-mortgage-in-canadian-history-is-here-165320457.html

Trigger Rate:

Trigger Rate

One of the World’s Frothiest Housing Markets Turned Into a Seller’s Headache Overnight:

https://www.bloomberg.com/news/articles/2022-05-19/one-of-the-world-s-frothiest-housing-markets-turned-into-a-seller-s-headache-overnight

Mark Mitchell – Mortgage Broker London Ontario
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