Most OK, but ‘minority’ of mortgage holders face stress if rates rise

THE CANADIAN PRESS OTTAWA — The vast majority of Canadian homeowners are in position to withstand an increase in interest rates, but it may present difficulties for a “sizable minority,” says Canada’s mortgage lenders.

OTTAWA — The vast majority of Canadian homeowners are in position to withstand an increase in interest rates, but it may present difficulties for a “sizable minority,” says Canada’s mortgage lenders.

The Canadian Association of Accredited Mortgage Professionals said Wednesday about 12 per cent of respondents — representing about 650,000 households — would come under stress if their mortgage rates rose by as little as one per cent.

The report, however, points out that many will have time to improve their finances before mortgage rates actually do rise.

“Most of these have fixed rate mortgages (so) by the time their mortgages are due for renewal, their financial capacity will have increased and the amount of mortgage debt will be reduced,” the report notes.

As well, the vast majority of challenged borrowers have at least 10 per cent equity in their homes.

“There are about 75,000 borrowers who are susceptible to short-term moves of interest rates and have limited home equity, less than two per cent of the 5.8 million mortgage holders in Canada.”

Many economists believe the Bank of Canada won’t move to start hiking interest rates until late next year or 2013, and that rate increases will be moderate once begun because of the weak economy.

The report was based on an online survey of 2,000 Canadians, slightly more than half of whom have mortgages, conducted in late October.

Overall, it found Canadians generally satisfied with their home ownership and confident they would be able to withstand an increase in rates.

Despite concerns from Bank of Canada governor Mark Carney that Canadians are taking on too much debt, 84 per cent said they could handle an increase in their monthly payments of up to $200. The average room for rising payments was $750 a month.

The report also finds that Canadians are taking advantage of low interest rates and that three quarters of those who have renewed mortgages this year received a discount from their previous deals. The average interest rate for homeowners is currently 3.92 per cent, down from 4.22 per cent last year.

As well, fewer people are drawing equity out of their homes, and 78 per cent say they have at least 25 per cent equity in their homes.

“Overall, our survey paints a picture of Canadians generally and homeowners in particular as very focused on their finances,” said Jim Murphy, president of the association.

“They are planning ahead, aggressively paying down their mortgage in advance of any further economic jolt.”

Murphy said the survey results suggests that there is no need for Ottawa to intervene a fourth time in four years to cool the housing market.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A vial of the Medicago vaccine sits on a surface. CARe Clinic, located in Red Deer, has been selected to participate in the third phase of vaccine study. (Photo courtesy www.medicago.com)
Red Deer clinical research centre participating in plant-based COVID-19 vaccine trial

A Red Deer research centre has been selected to participate in the… Continue reading

Asymptomatic testing will now be available for "priority groups" who are most likely to spread the COVID-19 virus to vulnerable or at-risk populations. File photo by THE CANADIAN PRESS
Red Deer jumps to 449 active COVID-19 cases on Sunday

1,516 new cases identified in Alberta

The QEII was closed Sunday morning due to a pole fire. (Photo courtesy City of Red Deer)
UPDATE: QEII near Red Deer reopens

The QEII has been reopened after being closed due to a pole… Continue reading

Innisfail RCMP are investigating a single-vehicle crash that happened west of Bowden on March 21, 2021. (File photo by Advocate staff)
Bashaw RCMP investigate fatal collision in central Alberta

Bashaw RCMP are investigating after a fatal collision Saturday afternoon. Police were… Continue reading

A damaged unicorn statue is shown in a field outside of Delia, Alta. in this undated handout photo. It's not often police can report that a unicorn has been found, but it was the truth Saturday when RCMP said a stolen, stainless-steel statue of the mythical beast had been located in a field not far from where he'd been taken. THE CANADIAN PRESS/HO, RCMP *MANDATORY CREDIT*
Mounties get their unicorn; stolen statue of mythical beast found in Alberta field

DELIA, Alta. — It’s not often police can report that a unicorn… Continue reading

Investigators from the Vancouver Police Department were in Chilliwack Saturday, collecting evidence connected to a double homicide. (file photo)
Police investigate shooting death of man outside downtown Vancouver restaurant

Vancouver police say one man was killed in what they believe was… Continue reading

Dr. E. Kwok administers a COVID-19 vaccine to a recipient at a vaccination clinic run by Vancouver Coastal Health, in Richmond, B.C., Saturday, April 10, 2021. THE CANADIAN PRESS/Jonathan Hayward
B.C. to start registering people 18 years and older for COVID-19 vaccines

VICTORIA — The British Columbia government says it’s inviting people 18 years… Continue reading

San Jose's Tomas Hertl, center, celebrates with teammates Patrick Marleau, left, and Rudolfs Blacers, right, after Hertl scored a goal during the first period of an NHL hockey game against the Minnesota Wild, Friday, April 16, 2021, in St. Paul, Minn. (AP Photo/Stacy Bengs)
Patrick Marleau set to break Gordie Howe’s games record

For Patrick Marleau, the best part about Monday night when he is… Continue reading

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, speaks during a press briefing at the White House, Tuesday, April 13, 2021, in Washington. (AP Photo/Patrick Semansky)
Half of U.S. adults have received at least one COVID-19 shot

WASHINGTON — Half of all adults in the U.S. have received at… Continue reading

People are shown at a COVID-19 vaccination site in Montreal, Sunday, April 18, 2021, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
Federal government to send health-care workers to Ontario, Trudeau says

MONTREAL — Prime Minister Justin Trudeau says federal departments and some Canadian… Continue reading

People cross a busy street in the shopping district of Flushing on Tuesday, March 30, 2021, in the Queens borough of New York. Access to the COVID-19 vaccine in the United States is growing by the day. THE CANADIAN PRESS/AP-Kathy Willens
Despite COVID-19 vaccines, Americans in D.C. not feeling celebratory — or charitable

WASHINGTON — This might make Canadians jealous of their American cousins for… Continue reading

A man pays his respects at a roadside memorial in Portapique, N.S. on Thursday, April 23, 2021. RCMP say at least 22 people are dead after a man who at one point wore a police uniform and drove a mock-up cruiser, went on a murder rampage in Portapique and several other Nova Scotia communities. THE CANADIAN PRESS/Andrew Vaughan
Memorial service in Nova Scotia marks one year since mass shooting started

TRURO, N.S. — A memorial service is planned for today in central… Continue reading

In this April 23, 2016, photo, David Goethel sorts cod and haddock while fishing off the coast of New Hampshire. To Goethel, cod represents his identity, his ticket to middle class life, and his link to one the country's most historic industries, a fisherman who has caught New England's most recognized fish for more than 30 years. (AP Photo/Robert F. Bukaty)
‘It’s more than just a fish:’ Scientists worry cod will never come back in N.L.

ST. JOHN’S, N.L. — The latest assessment of Atlantic cod stocks, whose… Continue reading

Most Read