Mortgage renewals mean housing takes up 50% of many Canadians’ budgets

As Canada experiences its biggest surge of mortgage renewals, a recent survey by rates comparison website Rates.ca reveals that housing costs for nearly half of all Canadians have skyrocketed to over half of their income. Conducted from July 24 to 26, the survey found that borrowing costs increased for 82% of those whose mortgages were renewed since January.

Most borrowers saw their mortgage rates rise between two and 4.99%, with housing costs consuming up to 50% or more of their entire household budget. This exceeds the recommended limit of 30% to 32% of gross annual income for mortgage expenses, according to financial experts. Younger homeowners, particularly those aged 18 to 34, were hit the hardest, with 90% renewing at higher rates and 56% reporting housing costs as 50 to 70% of their budget.

Foreign-born homeowners also faced similar financial strain. Four in ten homeowners chose five-year terms, while 35% selected three-year terms, while only seven percent opted for longer terms. Tran, a mortgage expert at Rates.ca, advises homeowners to review renewal options at least 120 days prior to avoid financial hardship.