How the central bank's latest big hike is squeezing Canadians with mortgages
Jul 18, 2022
People with variable-rate mortgages or whose terms are set to expire are worried about what's next
Thousands of Canadians carrying hefty mortgages are scrambling to balance their home budgets after the Bank of Canada raised its benchmark interest rate by a full percentage point to 2.5 per cent last week.
"If I don't receive a pay increase or maybe some supplementary income, it will be really tough," Kartik Soni said recently as he headed back into the office from a break in downtown London, Ont.
Soni has a variable-rate mortgage on the home he bought in London after moving from Brampton with his family six months ago.
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"In January this year, I was paying somewhere around $1,920 and now I'm paying $2,500," said Soni of his monthly mortgage payments.
In January, Soni's interest rate was 1.54 per cent. Now, it's at 3.79 after a series of hikes.
Both Soni, left, and Singh moved to London within the last six months and are concerned about how the interest rate hikes will affect their mortgages. (Rebecca Zandbergen/CBC News)
Soni works in banking and hopes his wife will soon land a job.
"So keeping my fingers crossed if she gets a good job or maybe a decent job, we'll be able to survive. Otherwise it will be really difficult."
The couple's grocery bill has also nearly doubled in six months, said Soni, from $500 a month to $1,000.
Soni's colleague, Amandeep Singh, is in a similar predicament. He's locked into a fixed-rate mortgage, but his term is up in six months.
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"I'm scratching my head what to do because the worst is yet to come," said Singh.
Singh moved from Manitoba to London two months ago because his family didn't like the winters there, but home prices are much more expensive in Ontario.
"I'm just counselling with everyone," said Singh. "Everybody is like variable, fixed, fixed, variable. Nobody is certain because the things are so uncertain at this point of time."
Singh figures once he negotiates the terms of his new mortgage, he'll also be on the hook for another $500 a month.
"Going forward, it seems like we will crash," said Singh.
Like Soni, he hopes his wife can get a better job. "She's working remotely, but she's looking for something bigger because we cannot survive in that."
Leitch bought her home at the beginning of the pandemic in 2020 and is relieved to be in a long-term fixed-rate mortgage. (Rebecca Zandbergen/CBC News)
In an office tower across the street, Ann Leitch is also on a break.
"We bought our house during COVID, so we're in a nice interest rate," said Leitch, whose home is in Kilworth just outside London. "We locked ourselves in safe and sound."
But Leitch is still facing stresses of her own.
"Right now my dad has his house up for sale and he's just happened to put it in at the wrong time," she said about the home that's been on the market for two weeks.
"It's actually putting us in a bit of a panic because he's got an apartment at a seniors' residence, so this house needs to sell."