More than a third of Canadians are regretting the mortgages they are currently in, according to a recent study by the Real Estate and Mortgage Institute of Canada (Remic).
The online survey included 1000 random Canadians.
Many Canadian homeowners are currently finding themselves facing huge and unexpected increases in their monthly mortgage payments due to consistent interest rate hikes, Remic said.
It said key findings of the survey are:
1. Many Canadians have ‘mortgage malaise’
- 34.1% of Canadians say ‘they regret the mortgage that they are currently in’.
- 21.80% say ‘interest rate hikes have made it unaffordable’.
- 12.30% regret being locked in at ‘a bad rate’.
Yet only 30.21 per cent of Canadians say they would have purchased a less expensive property if they knew mortgage rates would go up.
2. Over half of Canadians can’t quote the current interest rate: Asked if they knew what the current interest rate is in Canada, over half of Canadians (59% combined) said they did not. (41.80% simply said no, 17.20% said ‘maybe’.)
3. Canadians are murky about their mortgage rates: Even more disturbingly, a combined 68.4 per cent of Canadians said they didn’t know what their mortgage payments would be if the Canadian interest rate reached 5 per cent …which is the current rate. 31.8% simply said they don’t know, and another 36.6% said they were not sure.
4. Does your bank really have your back?
- Over half of Canadians (57%) had a bank arrange their mortgage.
- Asked if banks always have the best mortgage rates, 43.10% said ‘maybe.’ 10.5% simply said ‘yes’.
- Over half of Canadians (57.80%) believe that banks give them the best mortgage rates because they are ‘loyal customers’. (21.20% ‘yes’ and 36.60% ‘maybe’)
- Canadian women trust bank rates more than men. 56.0% of women think that banks have the best rates vs. only 43.90% of men.
“Having blind faith in banks could be an expensive mistake for homebuyers. Homeowners tend to take blindly and gratefully what they are told from the bank and spend less time comparing mortgage rates than they do comparing credit cards,” said Joe White, President and CEO of Remic. “Canadians believe that a bank would never give them a mortgage that they can’t afford, but is a bank really concerned about your quality of life and factoring that into the monthly mortgage calculation? We teach that mortgage brokers need to go further. The best brokers will advise with balance between purchasing a property and a reasonable quality of life. A homeowner who qualifies at a bank with great credit can do very well with a mortgage broker and get a very competitive rate.”
5. Married to your mortgage?
- Nearly half (45.2%) of Canadians don’t think they will be able to pay off their mortgages until age 60.
- 8.2% think they will be 80 or older, 4.60% think they will be 75, and 8.20% think they will be 70. 12% simply say that ‘they don’t know’.
- Over half (58.22%) of Canadians admit that they don’t know their exact monthly mortgage payments ‘without looking them up’.
“Buying a home is an exciting, emotional and adrenaline-filled process,” added White. “60-90 days after a purchase, the homebuyer’s adrenaline can turn to regret if they’ve overextended themselves and it can become a place that they sleep at and pay off forever. A home is the last thing that Canadian homeowners would default on because their families need a roof over their heads. Everything else suffers, cancelled vacations, high interest from carrying a balance on credit cards and overall quality of life.”
“Our survey is clearly showing that Canadian homebuyers need to educate themselves more on the basics of taking on a mortgage and its lasting financial impact. This is exactly the kind of information that they would be getting from a licensed mortgage broker and a big part of the advantage of using a broker to secure a mortgage,” added White.