Are you concerned about Mortgage Renewal?
About half (47%) of Canadians who are applying for or renewing a mortgage express fear about being approved for the required amount.
According to a recent poll by BNN Bloomberg and RATESDOTCA, 16% of respondents who are purchasing or renewing their mortgage are “extremely concerned” about their eligibility. Over three quarters (71%) of respondents who intend to buy a home in the upcoming year say they are worried about qualifying, with 34% saying they are “extremely” worried.
Since March 2022, the Bank of Canada has increased its overnight target rate by 425 basis points to 4.50%.
For those with variable mortgage rates or lines of credit, such as Home Equity Lines of Credit, this has significantly increased borrowing expenses. In addition, fixed mortgage rates have almost doubled from the 2% to 5% level in late 2021 to today.
This has impacted some borrowers’ capacity to qualify for the mortgage they need, especially younger first-time borrowers. According to the survey, 60% of those between the ages of 18 and 34 are worried about their eligibility.
In contrast, the percentages for people aged 35 to 54 and 55 and older, respectively, were 47% and 29%. Due of the difficulties in qualifying, more borrowers are looking at non-traditional lenders.
According to the study, over a third (29%) of those planning to buy a home said they are thinking about using an alternative lender. Other possibilities examined include employing a subprime or private lender (11%), a monoline lender, or a credit union (8%), while the other 11% stated they would think about approaching family or friends for money.
