The struggle is real: how homeowners are coping with soaring mortgage rates
Nov 8, 2023
auto_awesome
Guest Victor Tran, an Ontario-based mortgage broker, discusses the challenges faced by homeowners with soaring mortgage rates. Topics include the impact on variable rate mortgage holders, financial strain, decision-making for a variable rate mortgage, financial challenges and anxiety, and the impact on young homebuyers. The podcast also explores renewing a mortgage and affordability challenges.
The Bank of Canada's decision to raise interest rates has resulted in increased mortgage payments for homeowners, impacting their affordability. Variable rate mortgage holders, as well as those needing to renew their fixed rate mortgages, are experiencing higher monthly payments. Many homeowners are finding it difficult to afford these increased costs, leading to financial strain and sacrifices in other areas of their lives. The surge in rates has caught homeowners off guard, especially considering the already challenging economic climate. The value of properties has also been affected, further exacerbating the affordability crisis. Despite these challenges, some homeowners are determined to hold onto their properties, even as the market becomes more unpredictable.
The Story of Cara: Challenging Affordability for First-Time Buyers
Cara, a 24-year-old with a variable rate mortgage, shares her experience of purchasing a condo in Vancouver. Despite having a down payment secured through an inheritance, she now faces increasing mortgage payments that put a strain on her monthly budget. In some cases, the rising costs have led to sacrifices in savings, holidays, and other expenditures. While variable rate mortgages were once considered a way to save money, the recent interest rate hikes have resulted in unexpected financial burdens. Although Cara has contemplated switching to a fixed rate mortgage, she still hopes that rates will decrease in the future and believes her decision was the right one overall.
Megan's Struggle with Renewing a Fixed Rate Mortgage
Megan, a nurse in her 30s, discusses her experience with renewing a fixed rate mortgage. When she first purchased her house, her mortgage payments were manageable. However, with the recent increase in interest rates, her monthly costs have significantly risen. As a result, Megan has had to rely more on credit card usage and faces financial stress while on maternity leave. The declining value of her property adds to her concerns about real estate investments. Despite the challenges, Megan is determined to hold onto her home, but acknowledges the need for better research and preparation when entering the housing market.
Insights from Mortgage Broker Victor Tran
Victor Tran, a mortgage broker, provides insight into the effects of rising mortgage rates on young buyers. He highlights the negative impact on those with variable rate mortgages, who have seen significant increases in monthly payments. Tran advises homeowners experiencing financial distress to reach out to their lenders for options such as payment deferrals or refinancing. He mentions that while distress sales and default rates have not drastically increased, there has been a rise in inventory due to investors selling their properties. Tran also discusses the importance of choosing the right mortgage term and rate, based on individual circumstances, and suggests that three-year fixed terms have become popular due to potential rate decreases in the future.
First, home owners with variable rate mortgages felt the pain of soaring interest rates. Then, people with fixed rate mortgages began to renew at sharply higher rates. In this episode, we hear from first-time homebuyers in Vancouver and Kingston who are now spending more than half their income on housing. And Rob talks to Victor Tran, an Ontario-based mortgage broker.
Remember Everything You Learn from Podcasts
Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.
