When considering long-term investment options, the majority of Canadians are in agreement that homeownership proves to be beneficial. Nonetheless, this journey often comes with unexpected hurdles, including unforeseen financial obligations.
Yet, the current scenario has led numerous homeowners to rethink their mortgage decisions due to the sudden surge in interest rates within a year. This, combined with the strain on household budgets attributed to inflation, has prompted a reconsideration of their mortgage choices.
A study conducted by The Real Estate and Mortgage Institute of Canada (REMIC) discloses insightful findings. Around 30% of the participants express remorse over their existing mortgages, with 22% citing unaffordability due to escalating interest rates and 12% feeling trapped in unfavorable interest terms.
Interestingly, despite these developments, 30% of homeowners indicate that they wouldn’t have opted for a smaller home even if they were aware of the impending mortgage rate hikes.
The survey participants’ awareness of their current interest rates appears somewhat lacking, as 41% admit to being unaware of the prevailing Canadian interest rate, while 17% remain uncertain. Moreover, a significant proportion—over two-thirds—admit to not knowing their potential mortgage payments at a 5% interest rate (the current rate).
More than half (58%) of Canadians confess that they cannot accurately state their monthly mortgage payments without referring to their records.
This lack of knowledge about interest rates speaks to the deep trust that Canadian homeowners place in their banks. A substantial 60% of respondents obtained their mortgages through their banks, and 43% firmly believe that banks consistently offer the best rates. Furthermore, 58% hold the belief that as loyal customers, they will always receive the most favorable rates.
Joe White, REMIC’s President and CEO, cautions against placing blind faith in banks, suggesting that this approach could prove costly for homebuyers. White points out that homeowners often unquestioningly accept the terms provided by their banks, dedicating less time to comparing mortgage rates than they would to comparing credit card options. He questions whether banks truly consider the homeowner’s quality of life and incorporate it into the mortgage calculation.
White emphasizes that qualified brokers should aim to strike a balance between homeownership and maintaining a reasonable quality of life.
The survey also delves into respondents’ perspectives on mortgage duration. Nearly half believe they will continue paying off their mortgages until they approach the age of 60. However, 8% anticipate being mortgage-free only by the time they reach 70, while 5% predict this will happen at 75 or later. An additional 8% foresee their mortgages lasting until at least the age of 80.
Concluding the findings, White suggests that Canadian homebuyers should educate themselves more thoroughly about the fundamental aspects of taking on a mortgage and its enduring financial implications. He underscores the value of seeking advice from licensed mortgage brokers, emphasizing that this guidance is a key advantage of using a broker to secure a mortgage.
Competitive Mortgage Rates. Trusted Mortgage Services. 1 Concorde Gate, Suite 702 Independently Owned and Operated
Brokerage License # 13304
Goodbye Headaches.
Hello Easy Mortgages and Lending.
North York, Ontario, M3C 3N6
1 Concorde Gate, Suite 702,
North York, Toronto, M3C 3N6
