News Update: CTV News – July 18th

Alex Lavender goes on CTV Atlantic to discuss how mortgage renewals in Canada are facing significant increases due to rising interest rates.

Jesse Thomas
Many mortgages coming up for renewal this year and next were locked in during COVID when interest rates hit a record low. Now the Bank of Canada reports those borrowers will likely see a 10% increase to their monthly payment.

Alex Lavender
For some people, it may be more extreme than that. It may be 20% some people, it may be very limited.

Jesse Thomas
The payment increases will vary depending on the type of mortgage and when it was signed, but the biggest hit will be to those five-year fixed borrowers who make up 40% of all mortgages in Canada.

Alex Lavender
The biggest change is going to be the people who took those record-low rates at about one and a half percent, who are renewing in a 4% range today. That’s going to be the biggest jump.

Jesse Thomas
According to ratehub.ca, a homeowner who bought an average-priced home in 2020 with a low fixed mortgage rate could see their monthly payments rise by $424 a month, or nearly $5,100 more per year. That’s nearly a 20% increase despite the shock. Experts say the impact on the housing market may be limited.

Cheryl Cook
We have to be slightly more cautious with buyer behaviour right now, but we still have a lot more buyers than we have homes for sale. So you know, for a lot of people, they would rather own a home than pay rent if they can.

Jesse Thomas
It’s a seller’s market here in Halifax, and prices remain high, outpacing price drops this month seen in other cities like Toronto, Montreal and Calgary. Even with the financial pressure on households. Few are selling.

Alex Lavender
The reason why we haven’t seen a lot of that is because what’s happened is the property values have gone up significantly. So if someone is a bit challenged for payments, we can typically re-amortize it, or we can take some of that equity out to consolidate other debts or give them a bit of a buffer.

Jesse Thomas
In volatile financial times, Lavender says the majority of his clients are still choosing three and five year fixed rate mortgages. Jesse Thomas, CTV News, Halifax.