Inevitable interest rate increases may hurt borrowers: report
Posted November 9, 2011 3:36 pm.
This article is more than 5 years old.
VANCOUVER (NEWS1130) – A report suggests some homeowners won’t be able to afford their mortgage payments as interest rates rise. It may be bad news for those new to the market or first-time buyers trying to get in.
Jim Murphy with the Canadian Association of Accredited Mortgage Professionals says it’s because interest rates have been low for a long time, but they’ll inevitably go up.
“That’s obviously a big issue in the Lower Mainland because Vancouver has the highest housing prices in the country and the highest average mortgages in the country.”
It could put some people in precarious situations like new homeowners who are barely making their payments, or those who have borrowed with low income or credit problems.
But Murphy says there is some good news.
“All of our research has shown that Canadians are being very prudent. They’re making additional payments on their mortgages and negotiating lower rates. The vast majority of Canadians can actually afford an increase of about 300 dollars on their monthly mortgage payments.”
The study used actual mortgage transactions to show the impact of a five per cent interest rate on borrowers.
The findings are in the association’s Annual State of the Residential Mortgage Market, November 2011.
