Younger Canadians age 18 to 34 were the most worried
Half of Canadian mortgage holders reported being concerned (24%) or somewhat concerned (28%) about their ability to make their mortgage payments when renewal time comes around, according to a new poll commissioned by CTV and conducted by Nanos Research.
By demographic, the survey found heightened worries among younger Canadians in the 18 to 34 age range, with 29% expressing concern and 34% being somewhat concerned.
At the other end of the spectrum, Canadians aged 55 and above exhibited lower levels of concern (16%) and mild apprehension (20%).
Women were found to have a greater degree of concern (26% concerned; 33% somewhat concerned) compared to men (22% concerned; 21% somewhat concerned), the survey added.
Concerns arise about upcoming mortgage renewals, with significant fixed-rate terms ending. Some borrowers may face challenges, with up to 15% of Desjardins borrowers under stress. https://t.co/TnmRj1QbdL#mortgagenews #mortgageindustry #mortgagerepayment #interestrates
— Canadian Mortgage Professional Magazine (@CMPmagazine) July 28, 2023
Nearly $1 trillion in mortgages in Canada are slated for renewal by 2026, said Dylan Smith, senior economist at Rosenberg Research & Associates. Smith noted that this volume represents around two-thirds of mortgages by value, raising concerns about the cascading impact on Canadian households and the economic landscape.
Smith is anticipating that this surge could spur a major upswing in average monthly mortgage payments. Smith also warned of a potential “demand shock,” asserting its potential to exert significant pressure on the housing market and, consequently, the broader economy.
“Given that the vast majority of fixed-rate mortgages and fixed-payment, variable-rate mortgages had locked in low interest rates before or in the early stages of the 2022/23 hiking cycle as consumers shifted away from fully variable mortgages, renewals will force mortgage holders on to much higher average interest rates,” Smith said.
“Based on the share of households due to renew, we calculate the average monthly mortgage payment will rise by a further 15% by the end of 2024, 30% by the end of 2025 and 45% by the end of 2026.”
