BoC rate increase would force 35% of mortgage holders into significant life changes
The Bank of Canada is making its latest interest rate decision this Wednesday and a hike will force many homeowners with a mortgage to do something drastic.
More than one third would need to make a significant life change such as getting a second job (17%), extending their mortgage amortization (16%), or even selling their home (9%), according to a new survey from WealthRocket.
The report shows that more than three in ten Canadians with a mortgage are paying more than 40% of their gross monthly income towards housing costs, above the CMHC standard of 39%, and more than one third of couples say one partner’s income is swallowed up by the mortgage with the other partner paying for the other household expenses.
"Most of us will know somebody who had to sell their home and downsize, or start renting because they couldn't afford it any longer," says David O'Leary, WealthRocket's personal finance expert. "But many people facing this situation will be reluctant to admit it until they have no choice."
Crippling debt
The WealthRocket poll follows other worrying signs of the struggles faced by millions of Canadians.
The latest MNP Consumer Debt Index revealed this week that more than half (51%) of Canadian households say they are just $200 from not being able to meet their financial obligations including paying bills and debt payments with three in ten already at that point.
And TransUnion’s Credit Industry Insights Report found that total debt among Canadian households (including mortgages) rose 4.2% (+$94.8 billion) year-over-year and reached a total of $2.3 trillion in Q2 2023.
