Homeowners struggling with rising interest rates
Many residents of Simcoe Muskoka are struggling to cope with the rising cost of living.
As gasoline prices hit record highs, the value of groceries rises, and other everyday essentials see an increase – so do interest rates.
The Bank of Canada remains on a rate hike path as it attempts to rein in inflation, which is now at its highest level in 31 years at 6.8%.
Two weeks ago, the bank raised its interest rate to 1.5%.
The increase has left some Barrie brokers wondering what the future holds for current and future homeowners who are just paying.
“Over the next three to five years, what you’re going to see are people really starting to struggle when they apply for renewals,” said Mortgage Sense owner and broker Steph Quenneville.
He said rising rates could cause people to file for bankruptcy or, worse still, have their homes foreclosed.
“At renewal, you may not be able to borrow more, so limit your spending in the near future,” Quenneville said from his downtown office.
Amanda Harper has owned her home in Barrie since 2016 before the market started to skyrocket in the county. She said as a mother of five children under the age of nine, she had to be at home looking after them, relying on her husband’s earnings to pay the mortgage.
“Renewing our mortgage at some point is definitely a concern,” Harper said.
The young mother said they were forced to cut back on expenses such as groceries and gas. Harper said her husband now bikes to work to save fuel.
“Do I think we’ll have to sell our house? No. But I think it will make it harder,” she said.
Manulife Bank of Canada recently released a study that found nearly one in four homeowners worried they would have to sell their home if interest rates continue to rise.
The seven-day survey in April found that 18% of landlords surveyed are already struggling to pay for their accommodation.
With files from The Canadian Press