Homeowners are barely getting by as it is. If Oakville mortgage rates were to increase even slightly, what kind of effect would it have?
When it comes to affording payments on their home, even the slightest increase could be a deal breaker for many homeowners. That’s why it didn’t come as much of a surprise when a recent study by Manulife Bank revealed that almost ¾ of Canadian homeowners would have a hard time paying off their mortgage if their payments rose by 10%.
Additionally, of those who were surveyed, more than 1/3 said that they could afford their mortgage bills to increase anywhere from one to five percent before they began struggling to pay, while 14% of those surveyed said even the smallest hike would create difficulties.
The fact that so many homeowners are at or near the max that they think they can afford is somewhat concerning. We are currently experiencing some of the lowest interest rates we have ever seen in Canada. At some point, rates are going to have to increase.
Who is at the greatest risk to suffer should rates rise? Millennials, most likely. With so many Millennials entering the real estate market and taking advantage of low-interest rates, a sudden hike in payments could cause several problems.
In the survey, 45% of people between the ages of 20 and 35 said that if the person with the highest income in their household were to suddenly lose their source of income, they would not be able to afford mortgage payments after 3 months. In a nutshell, it’s almost as if millennials are living paycheck to paycheck.
Another factor to consider with millennials is that many of them are still in high amounts of debt. Many of them are still paying off their post-secondary tuition, paying for a car, a wedding, etc. The added payments that come with a mortgage is just another thing they must pay for.
If you haven’t already done so, planning for the financial future is essential for any homeowner or prospective buyer. With interest rates constantly fluctuating, it’s only a matter of time before they are back on the rise.
If you’re considering buying or selling a home, consider speaking with an Oakville mortgage broker at the Loewen Group. Our team of qualified professionals is ready to help you prepare for homeownership and find you low Oakville mortgage rates!
Contact us today and learn how we can help!