A recent survey commissioned by online mortgage marketplace ratefilter.ca has found that a significant percentage of Canadians are finding it increasingly difficult to make ends meet due to soaring housing costs. The survey, which garnered insights from 1,548 participants, paints a grim picture of the financial challenges homeowners and renters face across the country.
According to the survey, a staggering 62% of Canadians are struggling with housing expenses that exceed the recommended guideline set by the Canada Mortgage and Housing Corporation (CMHC). The CMHC suggests that individuals should not spend more than 30% of their pre-tax income on housing. However, the survey indicates that Canadians are, on average, shelling out a substantial 37% of their pre-tax income on housing, with 62% surpassing the CMHC's recommended threshold.
These findings offer new insight into the financial health of Canadians, especially as the Bank of Canada (BoC) prepares to make a crucial interest rate decision on October 25. The survey underscores the growing concerns of individuals who are grappling with the repercussions of higher interest rates.
Andy Hill, the co-founder of ratefilter.ca, weighed in on the survey results, saying, "These statistics corroborate what we've been hearing anecdotally from Canadians who are struggling to make ends meet due to higher interest rates. Many Canadians feel like they're at a breaking point due to higher interest rates. Even though the Bank of Canada decided to hit pause, these borrowers will still be dealing with rates at a 20-year high."
Hill explains that while interest rates have climbed higher than today's rates in the past, people were generally carrying far less debt. The present rate of 7.2% is an all-time high when considering the debt load Canadians carry in 2023. The prime rate was just 2.4% before the pandemic began; three years is a short period of time to see such volatility in the market.
What makes these statistics even more unsettling is the aspect of job security. Despite a relatively low unemployment rate, the survey uncovered that 51% of Canadians would find themselves unable to meet their mortgage payments within three months if they were to lose their primary source of income. Even more concerning is that 16% of mortgage holders would fall behind on their payments within a mere 30 days under similar circumstances.
Hill says, "It's very important for consumers to remain in a holding pattern as best they can and recognize that this might be a short-term cycle. As long as they don't make any rash decisions and can survive it, this might end up being a great story they can tell their kids."
The online survey was carried out by Leger on behalf of ratefilter.ca and is based on data collected from a representative sample of 1,548 adult Canadians, including 1,028 homeowners and 650 mortgage holders. The survey was conducted from October 13 to 16, 2023.
The results of this survey serve as a stark reminder of the financial challenges faced by many Canadians, highlighting the need for careful financial planning and prudent decision-making in the face of housing costs that continue to strain household budgets. As the Bank of Canada's interest rate decision looms, the nation watches with bated breath, hoping for some relief in these trying economic times.
Dean LaBerge, Local Journalism Initiative Reporter, Grizzly Gazette