The current market has left many homebuyers in an extreme state of malaise. They adore their new home, but the massive increases in monthly mortgage payments fuelled the regret felt by over one-third of participants in a recent survey by The Real Estate and Mortgage Institute of Canada (REMIC).
REMIC surveyed 1,000 Canadians about their home purchases, costs, and mortgage increases, and the results revealed that many in the country are having difficulties resolving their homeownership with the current predicament of rising interest rates.
34.1 per cent of Canadians claim that they regret their current mortgage, while almost 22 per cent said interest rate hikes have made homeownership unaffordable. However, only 30 per cent insisted that they would have purchased a less expensive home if they could have predicted that mortgage rates would rise.
Banks and blind trust
The survey shows that many Canadians put a lot of trust in their bank. More than 57 per cent said they believed their bank gave them the best rates because they are “loyal customers.”
“Having blind faith in banks could be an expensive mistake for homebuyers. Homeowners tend to blindly and gratefully take what they are told from the bank and spend less time comparing mortgage rates than credit cards,” said Joe White, president and CEO of REMIC.
“Canadians believe that a bank would never give them a mortgage they can’t afford, but is it concerned about your quality of life and factoring that into the monthly mortgage calculation? We teach that mortgage brokers need to go further. The best brokers will advise with balance between purchasing a property and a reasonable quality of life. A homeowner who qualifies at a bank with great credit can do well with a mortgage broker and get a competitive rate.”
Canadians unsure of their mortgage rates
REMIC also uncovered some startling details in its survey. Nearly 60 per cent of those questioned did not know the current interest rate, while more than 68 per cent said they wouldn’t know what their mortgage payments would be if the Canadian interest rate hit five per cent. For the record, the current Bank of Canada interest rate is currently five per cent.
Over 58 per cent admitted that they couldn’t quote their exact monthly mortgage payment without consulting documentation.
“Buying a home is an exciting, emotional, and adrenaline-filled process,” added White. “60-90 days after a purchase, the homebuyer’s adrenaline can turn to regret if they’ve overextended themselves, and it can become a place that they sleep at and pay off forever.
A home is the last thing Canadian homeowners would default on because their families need a roof over their heads. Everything else suffers, cancelled vacations, high interest from carrying a balance on credit cards, and overall quality of life.”
“Our survey clearly shows that Canadian homebuyers need to educate themselves on the basics of taking on a mortgage and its lasting financial impact. This is exactly the kind of information they would be getting from a licensed mortgage broker and a big part of the advantage of using a broker to secure a mortgage,” added White.
