Manulife Bank of Canada came out with a new survey, and the news isn’t great. Nearly a quarter of homeowners think they’d have to sell their home if interest rates keep going up.
In that same survey, 18 percent of folks polled say they already can’t afford their home.
Can you relate?
Interest rates were super low for more than a decade following the 2008 financial crash. Mortgages were easy to get. When the pandemic hit, folks started leaving big cities for larger homes in smaller places.
That helped drive up housing prices on VanIsle. In fact, it’s hard to find a place on the Island for less than $200,000 now.
Those high house prices might have looked okay when interest was low. But it’s going back up.
The Bank of Canada raised interest rates to 1.5 percent. They’re trying to keep inflation in check. Inflation is at a 31-year record of 6.8 percent (the causes of inflation are another story). So it’s likely interest rates are just going to keep going up.
Lysa Fitzgerald is the vice-president of sales at Manulife. She told CBC that “[s]ome Canadians made decisions to take their mortgages out based on what they could be approved for.”
She wonders how many of these new buyers asked, “I know I can get approved for a mortgage at this particular level, but what can I actually afford?”
And with interest rates set to go up again, what folks can afford is about to change.
There are things we can do to fix the housing crisis. They take a bit of time to set up. But it’ll be a few years before the biggest mortgages are due for renewal.
In the meantime, maybe it’s time to start that co-op you’ve been dreaming about…