With the Bank of Canada’s recent interest rate hikes, many Toronto homeowners are finding it hard to keep up. A lot of homeowners will be forced to sell this year.
Canadian Homeowner Survey
A recent survey conducted by Yahoo/Maru Public Opinion found that one in three Canadian homeowners would be forced to sell or vacate their homes within 10 months if the current benchmark interest rate of 4.5 per cent remains unchanged.
The results of the survey indicate that the ability of homeowners to sustain current interest rates varies greatly depending on their type of mortgage or financing method.
45 percent of Canadians with variable rate mortgages would only be able to withstand today’s interest rates for about 8 months. The same applies to 45 per cent of those with a line of credit on their home.
However, homeowners with fixed rate mortgages appear to be feeling less pressure. About 35 percent say they’d be able to sustain a 4.5 percent interest rate for about 10 months.
Bank of Canada Keeps Raising Rates
The Bank of Canada has raised its benchmark overnight rate by 25 basis points in each of the last eight consecutive rate hikes, bringing the current rate to 4.5 per cent, the highest level since December 2007.
Many Canadians are now being forced to sell at a significant loss, potentially leading to financial ruin. While the Bank of Canada is using interest rate hikes as a tool to control inflation, it’s having real human consequences. Inflation is still high, debt loads are still increasing, and a slowing economy could still lead to a recession.
Canadians Are Struggling
The survey also found that 11 percent of Canadians have had to make drastic financial adjustments and lifestyle changes. This is largely due to rising interest rates. 22 percent have experienced very serious pressures. Another 38 percent felt anxiety, but have managed to keep up. While 29 per cent reported no significant impact at all.
The recent interest rate hikes by the Bank of Canada are affecting Toronto homeowners in various ways. While some are feeling the pressure and making drastic financial changes, others are managing to keep up.
Regardless of the impact, it’s important for Toronto homeowners to stay informed and find ways to manage their finances in light of the current economic climate.