New report shines a light on the woes of squeezed borrowers
Canadians continue to struggle with rising housing and mortgage costs, with the number of those who exceeded the national housing agency’s recommended limit for housing expenses on the rise.
A new survey by ratefilter.ca showed that while the recommended limit set by Canada Mortgage and Housing Corporation (CMHC) on housing expenses was 30%, 62% of Canadians have exceeded this with the average household spending 37% of their pre-tax income on housing costs.
Renters spent more money on housing compared to homeowners as they spent an average 43% of their pre-tax income. Homeowners only spent an average of 34%. However, just 35% of homeowners did not have mortgage.
Mortgage holders were reportedly using 41% of their pre-tax income for housing with 51% stating that they will not be able to survive more than 3 months without their main source of income. Sixteen percent (16%) said they will not be able to financially manage one month without their income. This was alarming as the unemployment rate in Canada held at 5.5%, according to Trading Economics.
“These statistics corroborate what we’ve been hearing anecdotally. Many Canadians feel like they’re at a breaking point due to higher interest rates,” said Andy Hill, co-founder of ratefilter.ca.
In the last 18 months, a series of rate hikes from the Bank of Canada had added to the financial strain felt by many Canadians. These increased have worsened the concerns surrounding housing affordability and financial stability.
“Even if the Bank of Canada pauses the rate hike, these borrowers will still be dealing with rates at a 20-year high,” said Hill.
The data from the report was based on an online survey conducted to 1,548 adult Canadians with 1,028 being homeowners and 650 being mortgage holders from October 13-16, 2023.
