Homeowners with variable mortgage rates and terms about to expire will feel the most pain from the rate hike. At higher interest rates, borrowers need to allocate a larger share of their disposable income to debt, leaving less for spending on food and other household necessities.
According to a recent Canada Mortgage and Housing Corporation report, the number of mortgages in arrears has remained low despite more households being worried about making mortgage payments on time. The relatively low number of mortgages in arrears is reflective of the financial stability and resiliency of Canadian households.Article contentOne way Canadians have been coping with higher mortgage rates is with choosing shorter-term fixed-rate mortgages.
Over the past year, amortization periods greater than 25 years have become increasingly common. In the fourth quarter of 2022, for example, 60 per cent of mortgages were amortized over more than 25 years, compared to 50 per cent three years prior.Article content