“Doesn’t seem right”: Canadian sells condo as mortgage payments set to double
“Housing in the Age of Inflation” is a Daily Hive feature series where we speak with renters and homeowners in Metro Vancouver about how meteoric interest rate hikes, ballooning rents, and lack of availability are impacting them. Have a story to tell? Email us at [email protected]
Adam Cantor has just listed his two-bedroom condo in a suburb south of Vancouver for sale.
It’s not what he wanted to do — after all, he’s called the South Surrey unit at Morgan Crossing home for 14 years. But he decided it was the only viable option when he learned his monthly mortgage payments would double at renewal in January.
“It doesn’t seem right when… you work your way, you’ve lived there for so long, and just because interest rates are so high, it creates a big barrier for people to stay where they want to stay,” he said.
Cantor is going through a divorce, and hanging onto the condo after paying out his ex was just barely tenable. But renewing his five-year fixed-term mortgage when Canada’s prime rate sits at 7.2% is pushing him over the edge.
He pays roughly $1,900 per month toward his mortgage, but as of January, he would be looking at about $4,000 monthly, renewing at a higher interest rate. With strata maintenance fees rolled in, his total monthly housing costs would approach $5,000.
He talked through renewal and re-mortgaging options but couldn’t find much that would give him relief. He also considered getting a roommate but didn’t like the idea that a stranger’s rent would be the only thing standing between him and foreclosure.
“What if they say, ‘Oh, I’m tight this month,’ and they can’t pay? I’m on the hook.”
Rate hikes force many Canadians to pay up or sell homes
The decision of whether to hold onto or sell their home is one many Canadians face today as mortgages come up for renewal during a time when the country is seeing its fastest and highest interest rate hikes in four decades.
Some homeowners are thinking of creative ways to stay where they are, from bringing in roommates to extending the timeline when they’ll pay back their mortgage. But for others, selling makes more sense.
The Canada Mortgage and Housing Corporation says 45% of all outstanding mortgages still need to be renewed in 2024 and 2025, with about 2.2 million borrowers still feeling the shock of renewing at a higher rate.
Payment increases are no small thing, either. CMHC predicts most borrowers will see a 30 to 40% uptick in mortgage payments within the next two years if they haven’t already.
About a third of mortgage holders have already seen payment increases, mainly those on variable terms or who’ve already had to renew fixed terms.
Mortgage broker Rebecca Casey, based in Surrey, tells Daily Hive she’s seeing many clients opt for shorter fixed-term mortgages these days in the hopes of securing a better rate once interest rates come down again.
She suggested extending mortgage amortization back up to 25 or 30 years, which could be a temporary tool to reign in monthly payments before getting back on track with lump sums when interest rates are lower.
“Everybody’s waiting for rates to come down and understanding this is a temporary period of time,” she said.
As for Cantor, he’s looking for somewhere he can rent for about what he was paying for his mortgage.
“[I’m] frustrated, I guess,” he said. “It’s like I have to downgrade my lifestyle for the same cost.”
Cantor considers himself lucky to be able to work remotely, so he’s able to move further out in Metro Vancouver without worrying about a commute. Selling his home of 14 years isn’t what he wanted to do, but he’s trying not to take it too hard by remembering it’s a pragmatic decision to not be stretched thin financially.
“I don’t know if it’s actually sunk in yet because I’ve just literally listed it,” he said. “But owning a property right now, for me, is not necessarily a need. You’ve got to do what’s best for you.”
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