A recent Royal LePage survey by Nanos suggests that a considerable portion of Ontarians anticipating mortgage renewals within the next 18 months are concerned about the accompanying costs.

The survey revealed that 21% of Ontario respondents are poised to renew mortgage agreements within the year, while an additional 15% will see their agreements up for renewal within 12 to 18 months. Of this group, a striking 74% express worry, particularly in light of the Bank of Canada’s series of rate hikes.

The findings, released before the Bank of Canada’s decision to maintain its key interest rate at 5%, were telling of the concern among homeowners. Shawn Ramautor, a Royal LePage Wolle Realty sales representative, highlighted that financial institutions are already gearing up for an increased number of Canadians potentially shortening their mortgage term or negotiating other alterations.

Regarding amortization periods, over two-thirds of respondents have periods spanning 20 years or more. The survey also noted that 60% of respondents’ mortgages range between $101,000 and $500,000. Additionally, 37% have managed to pay off less than 25% of their mortgage to date.

Struggles for Variable-Rate Mortgage Holders

Homeowners with variable-rate mortgages have faced substantial financial pressure due to the rising rates. The survey uncovered that 46% of variable-rate or hybrid mortgage holders in Ontario felt significant financial strain due to higher interest rates, while 30% experienced a minor strain.

In response to these strains, many have cut back on both discretionary and essential spending, with significant reductions in expenses like travel, dining out, groceries, and utilities. While 45% are saving less of their income, 40% had to dip into their savings to cover expenses. Although none reported skipping a mortgage payment, 5% mentioned the necessity of selling their homes.

Preparation for Future Mortgage Renewals

While fixed-rate holders have managed to avoid some financial strain in recent years, the Royal LePage report suggests this respite might not last long. According to Ramautor, homeowners recognize the inevitable shift to a more costly borrowing environment and are taking proactive measures by scouting for the best rates and considering various options for their mortgage renewal.

Canadian Mortgage-Holders’ Resilience

The survey indicated that 64% of those with variable-rate or hybrid mortgages have witnessed their mortgage payments surpass the trigger rate due to increased interest rates, leading to higher monthly payments. Royal LePage’s COO, Karen Yolevski, noted the financial challenges faced by Canadians due to rising home prices and escalating interest rates. Yet, she expressed confidence in Canadians’ cautious financial behavior and the country’s robust economy, signaling a substantial support system for individuals navigating these financial trials.

“Canada’s strong employment rate and the rigorous lending practices of our major banks continue to ensure that a vast majority of households are able to navigate these financial challenges without having to sell their homes,” Yolevski said, underlining the country’s sound financial infrastructure and the public’s prudent financial practices.