But for those who decide that an increase is too much for their budget, considerations include whether to downsize, move to a more affordable region, or rent out a portion of their existing home.
“When it comes to post-pandemic mortgage renewals, many Canadians have avoided the worst-case scenario of having to sell their homes due to the inability to cover the cost of their mortgage, thanks to solid employment trends and declining interest rates,” said Phil Soper, president and CEO, Royal LePage. “Nevertheless, some will face a substantial rise in their mortgage costs, putting added pressure on their household finances. Many in this situation are exploring options to lower their monthly fees, such as extending their amortization period; a tactic which has proven popular.”
Eight in ten of those expecting an increase in their monthly mortgage payment say it will strain their finances but not all are thinking of selling their home, with 60% preferring instead to explore other cost savings to mitigate the higher mortgage payment.
While many said this will include reducing travel and cutting back on gas and groceries, one third are also thinking about curbing spending or investing. Around a quarter are considering how they can boost their income, for example with a second job.
“Even in challenging financial times, Canadians continue to prioritize home ownership and paying down their mortgages – cutting back on other spending, and even savings, if absolutely necessary,” said Soper. “Delinquency rates in Canada remain extremely low, arguably the lowest among advanced economies worldwide, despite the rising cost of living and household debt. For example, the rate of mortgage default in the US is more than fifteen times higher.”
