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Rising Mortgage Rates, Rising Trouble
Almost half a million more mortgage holders would be in trouble if their rates hit 5.25 per cent, a national survey showed Monday.
Canadian mortgage rates
are already climbing ahead of an expected interest-rate hike next month. In light of a rising rate environment, a biannual report by the Canadian Association of Accredited Mortgage Professionals simulated the impact of mortgage-rate increases up to 5.25 per cent. The current average mortgage rate is 4.02 per cent among households that locked in fixed rates during the past year.
It found that about 375,000 mortgage holders “are already challenged” by their current payments, and another 475,000 might be if their rate rises to 5.25 per cent.
Many borrowers should be fine because they have the flexibility to adjust payments if need be, said the group’s chief economist, Will Dunning.
The tendency has been to higher rates, though several banks — including Royal Bank of Canada on Monday– have trimmed some mortgage rates in recent days. RBC’s five-year closed rate is now 6.10 per cent — still higher than several months ago.
Monday’s report was compiled from an online survey of 3,000 Canadians, almost 1,800 of whom were home owners with mortgages. The survey was conducted by public-opinion firm Maritz for CAAMP, during April.
Among mortgages created during the past year, two-thirds are in a fixed rate, 29 per cent are variable or adjustable, and 6 per cent are combination mortgages.
Tags: Mortgage, Real Estate
