25 Mar
Considering that interest rates will most likely increase in the next few months, the majority of the mortgage holders have revealed in a survey that they would be able to handle a rise in monthly payment of more than 10%. This insight was shared by the Mortgage Professionals Canada in their recent State of the Housing Marketing report, which provides the current overview of the attitudes of mortgage consumers, their expectations, and home-buying behavior.
In the report, it was highlighted that the majority of borrowers have strong financial stability, which is indicative of managing higher rates, however, there is a percentage of respondents who are still struggling with their payments, and more people would struggle in the future as well depending on the size of the payment increase. Approximately 6% of mortgage-holders have revealed that they are currently struggling to make payments with their current mortgage rate and an additional 23% would have difficulty if their payments increased by 10%.
Because of the recent hikes in housing prices and the rising interest rates, Canadianâs views of purchasing a home have changed. According to the survey conducted, 29% of the Canadians perceive that now is a good time to buy a home within their community. On the other hand, 90% of current homeowners revealed that they are happy with their decision to buy a home.
An important aspect to highlight is that the rising home prices have become an obstacle for first-time buyers to purchase a new home, however, the rising prices are increasing the overall net worth of existing homeowners. In the third quarter of 2021, the residential real estate value rose to $238.4 billion which accounts for more than half of the increase in national wealth, as reported by Statistics Canada. Furthermore, non-residential real estate increased by $125.6 billion. Moreover, the non-financial assets of Canada increased by 3%, reaching $14.6 trillion.
In addition, the rate of mortgage borrowing was maintained in the same quarter, and this added $45.9 billion in new debt, bringing the total mortgage debt to $1.9 trillion.
Further in the report, data regarding the percentage of current mortgages is also provided. The data revealed that 66% of mortgage holders currently have a fixed mortgage rate, 74% of the borrowers have always preferred to have fixed rate, 15% locked in a variable rate more than 12 months ago, and 8% locked in from a variable rate within the past 12 months. Moreover, the average purchasing price of homes amongst first-time buyers was $500,491 which has increased from $476,500 in 2020.
