Risks and challenges continue in the ongoing elevated-rate environment
Even without another Bank of Canada hike, high interest rates will eventually affect fixed-rate mortgage owners in the form of payment hikes come renewal time, according to Daniel Vyner, principal broker at DV Capital.
In an interview with BNNBloomberg.ca, Vyner said that all things being equal, a rate hold would be preferable to a hike for many mortgage holders, although a freeze will still weigh on borrowers’ finances.
“Don’t underestimate the impact of a Bank of Canada rate hold in an elevated interest rate environment, especially on those who entered the real estate market and budgeted for homeownership at lower rates and mortgage payments,” Vyner said.
At the same time, Vyner said that he is observing a “change of sentiment toward variable-rate mortgages,” even as a sizeable number of consumers still prefer shorter-term fixed mortgages. Vyner is anticipating many variable offerings to “outperform a mid- to long-term fixed rate mortgage.”
Tania Bourassa-Ochoa of CMHC highlights the challenges faced by Canadian mortgage holders, underlining the vulnerability of homeowners in the country.
— Canadian Mortgage Professional Magazine (@CMPmagazine) November 14, 2023
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Alana Riley, head of insurance mortgages and banking solutions at IG Wealth Management, stressed the likely lasting impact of the current rate environment on households.
“Keeping an elevated prime rate does continue to burden household cash flow for Canadians with variable-rate mortgages, HELOCs (home equity line of credit), and unsecured lines of credit,” she told BNNBloomberg.ca.
