High cost of renewing mortgages stressing homeowners, poll finds
Calgary homeowners are potentially a worried bunch when it comes to their mortgages that may be soon up for renewal, a new survey suggests.
The study, commissioned by Royal Lepage and conducted by Nanos, found 82 per cent of Alberta respondents with a fixed-rate mortgage set to renew in the next 18 months are worried about what renewal will look like.
“In Alberta, we saw the highest concern in the country,” says Karen Yolevski, chief operating officer at Royal Lepage Real Estate Services Ltd.
That's compared with the national average of 74 per cent.
As to why Albertans are more concerned than other Canadians is somewhat perplexing, she says, noting that 75 per cent of Wild Rose Country respondents have mortgages of $500,000 or less.
“That's compared to markets like Toronto and Vancouver where people have million-dollar mortgages.”
It's all the more puzzling considering 61 per cent of Alberta respondents don't have a high ratio mortgage, meaning they have “good equity” in their current home, she adds.
Of course, higher payments are unlikely to lead to a situation where Albertans — and the roughly 3.4 million Canadian homeowners in total with fixed mortgages coming up for renewal — can't afford to pay their mortgages once they do renew.
“The absolute vast majority of Canadians can make their mortgage payments,” Yolevski says, noting data showing just 15 of every 10,000 mortgages in Canada have payments in arrears more than 90 days.
Yet the higher rates definitely are having an impact on the resale market, even in Calgary.
“It's definitely an issue,” says realtor Nevin Jones with Re/max Complete Realty in Calgary.
“What are you going to do when you have to add an extra $800 a month that you may not be able to afford?”
Most individuals are going to stretch out their amortization upon renewal to hold onto their home and make their financial lives easier, he adds.
But they're also likely to wait longer to make that move-up buy, even though demand for homes remains high amid record low inventory, Jones adds.
“They just don't have to buy or sell.”
In turn, first-time buyers — already facing affordability challenges due to higher rates — are seeing fewer lower-priced single-family detached homes coming to market and are looking to purchase condominium apartments or townhouses.
“I don't have a crystal ball, but I predict the condos and townhouse market — because they didn't see the growth during the pandemic — will see most of the growth because that's what's affordable,” Jones says.
Even with the affordability and inventory challenges, Yolevski says Calgary will likely continue “on the tear it's been on” in recent months.
“Certainly, there are buyers out there with the appetite to buy, and sellers with confidence they're going to get good money for their home,” Yolevski says.
Royal Lepage forecasts the average price in the city will rise nearly 10 per cent year over year.
“Calgary is really the winner across Canada in terms of growth,” she adds.