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67% of mortgage borrowers are worried about making renewal payments

Findings from Ratehub.ca’s 2023 Mortgage Survey

It’s no secret that impending mortgage renewals this year and next are a prominent concern.

With an anticipated $251 billion in mortgages coming up for renewal in 2024 – to be followed by another $352 billion in 2025 – the fact that today’s borrowing environment is much pricier than just a few short years ago poses some considerable challenges for everyone from the Bank of Canada to individual borrowers.

The central bank has released its own research projecting that nearly 80% of renewing mortgage borrowers “may face significantly higher payments,” by the end of this year, and “virtually all” by 2026. Now, new data compiled by Ratehub.ca reveals just how squeezed today’s borrowers are feeling as a result.

Borrowers are concerned about their ability to make mortgage payments

According to the survey, which polled 2,353 Canadian homeowners between December 3 - 31, 2023, the majority of respondents are struggling with today’s higher rates. A total of 68.5% reported it had become more challenging to pay their mortgage since March 2022, when the BoC kicked off its rate hiking cycle. Of this group, an additional 66.9% expressed worry about being able to make their mortgage payments once their renewal comes up.

“Not surprisingly, the majority of our homeowner respondents acknowledged that it has become more challenging to carry their mortgage since the start of the Bank of Canada’s hiking cycle, with growing concerns that they’ll be able to continue servicing their loans at renewal time,” says Penelope Graham, Ratehub.ca’s Director of Content.

In order to cope with today’s higher interest rate environment, respondents reported a number of approaches, including:

  • Downsizing my home: 24.13%
  • Refinancing my mortgage: 28.93%
  • Switching to a non-prime (B or alternative) lender: 17.31%
  • Tightening other areas of my budget: 54.08%
  • None of the above: 19.65%

“It’s evident that mortgage holders facing a more challenging rate environment upon renewal are exploring options to mitigate the impact – notably, nearly 29% say they plan to refinance their mortgage loans,” Graham says. “This can prove to be an effective way to offset higher rates, either by switching to a lender with more favourable term features, extending their amortization, or pulling out built-up equity in order to help with higher monthly payments.”

Borrowers continue to crave stability, even as variable rates could decrease

Notably, fixed mortgage rates continue to be the top choice for renewing borrowers. A total 65.1% of respondents reported they’re currently locked into a fixed rate. This was little changed when asked what rate they’re considering at renewal time, with 62.6% continuing to favour fixed rates. This is despite wide expectation that variable mortgage rates will start to decline in the latter half of 2024, when the Bank of Canada begins to unwind its monetary policy tightening.

“Fixed mortgage rates continue to be the most common choice for borrowers, even as rates have soared since early 2022. A total of 65% of our respondents with existing mortgages are currently in a fixed rate, and nearly the same number plan to lock back into one at renewal time,” Graham says. 

A previous study of Ratehub.ca’s internal inquiry data found that demand for five-year variable rates has plummeted over the BoC’s hiking cycle, accounting for only 5% of submissions on the site last spring. This was compared to 26% in 2022. Meanwhile, appetite for fixed mortgage rates steadily rose over the same time frame, with inquiries for five-year fixed mortgages accounting for 79%, up from 66% in 2022.

“This reflects borrowers’ desire for stability in a volatile marketplace, even as expectations grow for lower variable rates in the near future,” Graham adds.

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Methodology: 
Ratehub.ca’s 2023 Mortgage Survey of 2,651 adults was conducted December 3, 2023 - December 31, 2023 by Ratehub.ca. Adults 18 years of age and older residing in Canada were surveyed using an online research panel method across a combination of desktop, mobile and tablet devices.