Mortgage costs leaving little ‘wiggle room’ for majority of homeowners

Fifty-eight per cent of Canadians with a mortgage say payments are crowding out other portions of their budget, poll finds

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A majority of Canadians who have mortgages say they are walking a fine financial line as interest rates start to rise.

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Almost 60 per cent of Canadians say their mortgage payments are already putting a squeeze on their household budgets, and this was before the Bank of Canada pulled the trigger on the first of what is expected to be several rate increases this year.

A poll released Monday from the non-profit Angus-Reid Institute found that 58 per cent of Canadians with a mortgage say “their payments crowd out other portions of their budget.” Almost three-quarters (75 per cent) of renters say the same.

“Few homeowners with a mortgage or renters have wiggle room to accommodate increases to the largest line items in their budget as interest rates rise,” the poll said.

Last week, the Bank of Canada raised its overnight lending rate from 0.25 per cent to 0.50 per cent. The central bank has started on a rate hike cycle to try to tame inflation that was up 5.1 per cent in January from the year before.

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For those with variable rate mortgages and mortgages coming up for renewal an increase in the lending rate could make balancing their budgets that much more difficult.

Among the group of homeowners and renters living at the financial edge, two-thirds (65 per cent) say they are experiencing difficulty meeting the household food budget. Almost all (92 per cent) have taken action to cut costs such as eliminating takeout (72 per cent) or switching to cheaper food brands (62 per cent) to cope with food inflation.

About 63 per cent of Canadians own their home, according to Statistics Canada.

Older Canadian are more likely to own their home outright.

The poll found that a majority of Canadians 54 and older are not carrying a mortgage, while just 22 per cent of people aged 45 to 54 are mortgage-free.

Fifty-two per cent of those with no mortgage on the Angus Reid cost of living index report being able to “stay ahead” of rising inflation. Seventy-three per cent of those with a mortgage say they are “losing pace” and 85 per cent say they are being “left behind” by the rising cost of living.

The online poll of 1,622 Canadians was conducted Feb. 11-13.