With an eye on a hot property market, which gained a significant number of mortgage buyers during the pandemic, Canada’s central bank is carefully crafting a weapon to fight inflation – the benchmark interest rate, which measures money across the country. affects the cost.
The Bank of Canada has raised the benchmark rate for the first time since 2018. It is now 0.5 per cent, up from 0.25 per cent during the pandemic, when COVID-19 forced business closures and layoffs. The bank is projected to continue raising rates this year to combat inflation, and for those with variable rate mortgages and those whose fixed rate mortgages come up for renewal, the impact could be significant.
The expense of paying is already crushing the budgets of most mortgage holders. While two-fifths of respondents (42%) believe they can easily manage their payments, a large proportion (46%) say they should be mindful of their discretionary spending. One in ten people (11%) say it limits their lifestyle, and a smaller percentage (1%), say maintaining their hefty mortgage payments is a real difficulty:
Homeowners with an annual household income of less than $100,000 are less likely than those with higher incomes to report that they have money left over after their mortgage payments.
Half (49%) of households earning six figures per year think they can easily manage their mortgage payments, while a third of those with lower incomes say the same. Meanwhile, nearly half of low-income households (53%) believe their mortgage payments force them to limit their discretionary spending, compared with those living above the $400,000 income threshold. compared to only 39%.