Nearly half of Canadians who are buying or renewing their mortgages are worried about it.
Canadians who are renewing their mortgage or purchasing a home are more apprehensive than ever before about their capacity to obtain the mortgage they require, and as a result, they are looking at alternatives to established lenders.
About half, or 47%, expressed concern about their ability to qualify, with 16% expressing extreme concern. That is what the most recent BNN Bloomberg and RATESDOTCA poll, which was carried out by Leger, found. 1,527 adult Canadians were polled between March 17 and March 19, and responses were gathered.
Those who will be purchasing or renewing in the coming year are the most concerned, with 70% expressing fear regarding eligibility. In the meantime, 60% of those between the ages of 18 and 34 are worried.
One of the fastest rate hikes in recent memory has been the recent spike in mortgage rates
According to the most recent data from RATESDOTCA, many lenders are currently offering mortgage rates ranging from 4.59 percent to 5.55 percent, depending on the kind and term.
When fixed-rate and variable-rate mortgages both dipped below two percent in late 2020 and early 2021, those rates were record low.
Although though property prices have decreased in many Canadian cities over the past year, this gain has raised the average mortgage payment and reduced affordability. According to information from the Canadian Real Estate Association, the average home price nationwide in December 2022 was $626,318, a decrease of 12% from the end of 2021.
So, it comes as no surprise that many are looking for alternatives to conventional lenders in order to secure financing or verify their eligibility for a renewal.
29 percent of those surveyed said they are evaluating alternatives, or close to one third. That includes 13% who are turning to friends and relatives for financial support and 11% who are thinking about using private lenders.
Yet, credit unions are another option to conventional lenders. As credit unions are provincially governed and frequently provide mortgage rates comparable to those of traditional lenders, they are not allowed to reject applicants who fail the federal mortgage stress test.
In order to pass the stress test, a borrower must demonstrate their ability to pay a mortgage rate of either 5.25 percent or the negotiated interest rate plus two percent, whichever is higher.
