Government Policy is Hurting Affordability
For years a headline story has been the increasing level of personal debt, which has now reached $1.70 for every dollar of disposable income.  The latest numbers show that Canadians have $1.53 trillion in mortgage debt. For many rising mortgage rates will be a problem.
In April, a MNP survey found that 25% of Canadian mortgage holders were already feeling the strain of higher rates. This is consistent with an IPSOS survey done in October after the first two interest rate hikes. At that time 42% of respondents said they couldn’t afford an additional $200 a month in expenses with 70% saying they were already curtailing their spending.
The latest increase in rates will mean more than $200 in extra monthly expenses for a good percentage of mortgage holders when they renew. That’s on top of higher gas prices, increased carbon taxes in BC and Alberta, higher car insurance rates in BC, property tax increases in every major urban centre and other mandatory cost increases from governments across the country. 
A significant number of mortgage holders will be forced to cut back discretionary spending, including retail, the auto sector and restaurants. This is one reason that the Bank of Canada’s forecasts economic growth to slow to 1.9% this year and hit only 1.5% in 2019. 
The impact of higher mortgage rates will extend far beyond first time buyers given that 47% of Canadian mortgages have to be renewed in the next 12 months.  Only 22% of current mortgages are for 3 years or longer, which means that 78% of Canadian mortgages must be refinanced – and it will be at higher rates.
For more information about your mortgage and how these changes will impact you, contact me.