[et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” width=”95%” max_width=”100%” custom_margin=”||-24px||false|false” custom_padding=”55px||||false|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][wahi_breadcrumb _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][wahi_breadcrumb-link title=”Real Estate 101″ _builder_version=”4.18.0″ _dynamic_attributes=”link_option_url” _module_preset=”default” link_option_url=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF9saW5rX3VybF9wYWdlIiwic2V0dGluZ3MiOnsicG9zdF9pZCI6IjcyMiJ9fQ==@” global_colors_info=”{}”][\/wahi_breadcrumb-link][wahi_breadcrumb-link title=”Sell” _builder_version=”4.18.0″ _dynamic_attributes=”link_option_url” _module_preset=”default” link_option_url=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF9saW5rX3VybF9wYWdlIiwic2V0dGluZ3MiOnsicG9zdF9pZCI6IjIxMDYifX0=@” global_colors_info=”{}”][\/wahi_breadcrumb-link][wahi_breadcrumb-link title=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF90aXRsZSIsInNldHRpbmdzIjp7ImJlZm9yZSI6IiIsImFmdGVyIjoiIn19@” _builder_version=”4.18.0″ _dynamic_attributes=”title” _module_preset=”default” module_text_color=”#686E6E” global_colors_info=”{}”][\/wahi_breadcrumb-link][\/wahi_breadcrumb][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _dynamic_attributes=”content” _module_preset=”default” header_font_size=”3.5rem” header_line_height=”4.5rem” header_font_size_tablet=”42px” header_font_size_phone=”2.75rem” header_font_size_last_edited=”on|phone” header_line_height_tablet=”4.5rem” header_line_height_phone=”3.2rem” header_line_height_last_edited=”on|desktop” global_colors_info=”{}”]@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF90aXRsZSIsInNldHRpbmdzIjp7ImJlZm9yZSI6IjxoMT4iLCJhZnRlciI6IjwvaDE+In19@[\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”1px||1px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][wahi_socialsharing _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][\/wahi_socialsharing][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”24px” text_line_height=”1.5em” custom_margin=”||10px|||” global_colors_info=”{}”]<\/p>\n
Some Greater Toronto<\/a> Area homeowners are paying hundreds of dollars or more per month in mortgage payments due to spiking interest rates.\u00a0\u00a0<\/span><\/p>\n<\/div>\n <\/p>\n<\/div>\n<\/div>\n<\/div>\n [\/et_pb_text][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”1.13rem” text_line_height=”1.18rem” custom_margin=”||5px|||” global_colors_info=”{}”]<\/p>\n By Josh Sherman\u00a0<\/span>| 5 minute read<\/p>\n [\/et_pb_text][et_pb_post_title title=”off” author=”off” date_format=”M j” categories=”off” comments=”off” featured_image=”off” _builder_version=”4.18.0″ _module_preset=”default” custom_margin=”||32px|||” global_colors_info=”{}”][\/et_pb_post_title][et_pb_image src=”@ET-DC@eyJkeW5hbWljIjp0cnVlLCJjb250ZW50IjoicG9zdF9mZWF0dXJlZF9pbWFnZSIsInNldHRpbmdzIjp7fX0=@” align=”center” force_fullwidth=”on” _builder_version=”4.18.0″ _dynamic_attributes=”src” _module_preset=”default” border_radii=”on|32px|32px|32px|32px” global_colors_info=”{}”][\/et_pb_image][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”1.13rem” text_line_height=”1.75rem” custom_margin=”||2px|||” locked=”off” global_colors_info=”{}”]<\/p>\n <\/p>\n<\/div>\n<\/div>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n Robert Everett had to make a tough decision last month. Either he and his wife needed to sell their house in <\/span>Whitby<\/span><\/a>, or agree to lock in their mortgage rate with their bank for the next three years.<\/span> \u00a0<\/span><\/p>\n The part-time delivery driver\u2019s financial outlook was very different before last March, when the Bank of Canada began hiking its overnight rate, which impacts borrowing costs, in a campaign to cool inflation (<\/span>the plan is working<\/span><\/a>, the BoC says).\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n About a year ago, Everett\u2019s mortgage rate was approximately 2.25%, and he was planning to purchase an investment property. At such a low interest rate, he\u2019d have no trouble investing while paying down the mortgage on the 2,000-square-foot detached home that he bought with his wife for $725,000 five years ago.\u00a0<\/span><\/p>\n \u00a0<\/span><\/p>\n But, by last month, his variable rate had ballooned to 7%. Locking in at 4.5% brought his monthly payments down to about $2,400 (he pays $1,200, bi-monthly), but that\u2019s still up considerably from the $1,700 he was paying before the rate-hiking cycle began. \u201cIt\u2019s a difficult situation,\u201d he says. Everett is not alone. Across the country, similar situations are playing out, stretching wallets and pushing some homeowners to the brink.<\/span><\/p>\n <\/span><\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” background_color=”#edf7f3″ custom_padding=”32px||32px||true|false” locked=”off” global_colors_info=”{}”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” header_2_text_align=”center” header_2_text_color=”#38505b” header_2_font_size=”2.63rem” header_2_line_height=”3.75rem” max_width=”800px” module_alignment=”center” header_2_font_size_tablet=”32px” header_2_font_size_phone=”27px” header_2_font_size_last_edited=”on|phone” header_2_line_height_tablet=”3.75rem” header_2_line_height_phone=”32px” header_2_line_height_last_edited=”on|phone” global_colors_info=”{}”]<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” locked=”off” global_colors_info=”{}”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n \u201cI think people are in trouble,\u201d Elan Weintraub, co-founder and mortgage broker at Mortgageoutlet.ca, tells Wahi. \u201cMortgages are people\u2019s largest liability and the cost of servicing the debt has essentially skyrocketed,\u201d he adds.\u00a0<\/span><\/p>\n <\/p>\n It\u2019s not just lower-income brackets that are experiencing challenges, Weintraub suggests: \u201cEven high-income people \u2014 when your payments go up a thousand, two-thousand, three-thousand dollars, it\u2019s a lot of money.\u201d<\/span><\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” background_color=”#f0faf4″ min_height=”334.8px” custom_padding=”27px||0px|||” global_module=”849″ saved_tabs=”all” locked=”off” global_colors_info=”{}”][et_pb_row custom_padding_last_edited=”on|phone” _builder_version=”4.18.0″ _module_preset=”default” custom_margin_tablet=”” custom_margin_phone=”” custom_margin_last_edited=”on|phone” custom_padding=”49px||61px||false|false” custom_padding_tablet=”” custom_padding_phone=”” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” header_2_text_align=”center” header_2_text_color=”#38505b” header_2_font_size=”2.63rem” header_2_line_height=”3.2rem” custom_margin=”||25px|||” custom_margin_tablet=”” custom_margin_phone=”|5px||5px|false|true” custom_margin_last_edited=”on|phone” custom_padding=”||0px||false|false” header_2_font_size_tablet=”2.63rem” header_2_font_size_phone=”2.4rem” header_2_font_size_last_edited=”on|phone” header_2_line_height_tablet=”3.75rem” header_2_line_height_phone=”2.5rem” header_2_line_height_last_edited=”on|desktop” locked=”off” global_colors_info=”{}”]<\/p>\n [\/et_pb_text][et_pb_divider show_divider=”off” _builder_version=”4.18.0″ _module_preset=”default” custom_padding=”||0px|||” locked=”off” global_colors_info=”{}”][\/et_pb_divider][et_pb_text admin_label=”Text” _builder_version=”4.18.0″ _module_preset=”default” text_text_color=”#e8db3a” text_font_size=”20px” text_orientation=”center” min_height=”35.8px” custom_margin=”-24px||32px||false|false” custom_padding=”||||false|false” custom_padding_tablet=”” custom_padding_phone=”|26px||26px|false|true” custom_padding_last_edited=”on|phone” global_colors_info=”{}”]<\/p>\n Join Wahi today and find out how easy it is to get real estate in the GTA<\/a>.<\/span><\/p>\n [\/et_pb_text][et_pb_divider show_divider=”off” disabled_on=”off|off|off” admin_label=”Divider” _builder_version=”4.18.0″ _module_preset=”default” height=”5px” height_tablet=”” height_phone=”1px” height_last_edited=”on|phone” custom_padding=”||0px|||” locked=”off” global_colors_info=”{}”] [\/et_pb_divider][wahi_wahiButton url=”\/ca\/en\/real-estate\/sign-up” button_font_color=”#000000″ button_color=”#EB7161″ circle_color=”#000000″ border_color=”RGBA(255,255,255,0)” focus_color=”#000000″ is_white_hover_text=”on” _builder_version=”4.18.0″ _module_preset=”default” locked=”off” global_colors_info=”{}”]<\/p>\n GET STARTED<\/p>\n [\/wahi_wahiButton][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}” custom_padding=”||4px|||”][et_pb_row _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.18.0″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n To illustrate the impact of higher rates on homeowners, Weintraub provides an example of a $500,000 loan with a 30-year amortization period.\u00a0<\/span><\/p>\n <\/p>\n Early last year, it was possible to secure an interest rate of 1.15%. \u201cEven lower, to be honest,\u201d notes Weintraub. That would peg monthly payments at $1,642.24. At a more contemporary rate of 6%, the payments on the loan leap to $2,974.12 per month.<\/span><\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.18.0″ _module_preset=”default” text_font_size=”21px” text_line_height=”1.6em” header_2_font=”||||||||” header_2_font_size=”36px” header_2_line_height=”1.3em” header_3_font_size=”1.25rem” header_3_line_height=”1.88rem” header_4_font=”|700|||||||” header_4_font_size=”1.25rem” header_4_line_height=”1.88rem” global_colors_info=”{}”]<\/p>\n Higher rates have some homeowners questioning their decisions.\u00a0<\/span><\/p>\n <\/p>\n Lately, mortgage agent Jason Friesen\u2019s phone has been ringing off the hook. Clients who have variable-rate mortgages \u2014 these fluctuate with a lender\u2019s prime rate, which itself is influenced by the Bank of Canada\u2019s overnight rate \u2014 want to know: should they try to lock in their interest rate today as a buffer against any future hikes?<\/span><\/span><\/p>\n <\/p>\n \u201cI\u2019m taking more and more calls,\u201d Friesen, managing partner at Outline Financial, tells Wahi. \u201cI think the last couple rate hikes we saw really kind of broke the backs of a lot of people.\u201d<\/span><\/p>\n <\/p>\n Each person\u2019s circumstances and financial situation is unique, but, generally, Friesen <\/span>says, anyone thinking about switching to a fixed-rate needs to consider the \u201clong-term repercussions\u201d before doing so. \u201cIf they\u2019re able to lock into a shorter-term \u2014 so a two-year or three-year \u2014 it may not be a bad opportunity, depending on how low the rates are,\u201d he adds. \u00a0<\/span><\/p>\n One Torontonian, who asked not to use her real name for privacy reasons, tells Wahi that her monthly mortgage payments have increased by $750 over the past year. \u201cEverything snowballed so quickly,\u201d says Jillian (not her real name), who works full-time in television. \u201cI never had a chance to get comfortable with one set rate.\u201d<\/span>
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<\/span>Everett opted for the latter, but the choice was difficult because it means he\u2019ll continue draining his savings to help cover the carrying costs for the foreseeable future. \u201cThey (the bank) gave us two options,\u201d Everett, 70, tells Wahi. \u201cWe\u2019re screwed both ways at this point,\u201d he adds.<\/span><\/p>\n“Mortgages are people’s largest liability and the cost of servicing debt has essentially skyrocketed.”<\/strong><\/span><\/h2>\n
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Mortgage Payments Are “Skyrocketing”\u00a0\u00a0<\/b><\/b><\/h2>\n
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We put the real<\/em> back in real estate.<\/span><\/h2>\n
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Locking in Rates\u00a0\u00a0<\/b><\/h2>\n
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<\/span>However, you don\u2019t want to get stuck with a higher rate for a five-year term if the BoC begins trimming rates again, something market-watchers suggest policymakers could start doing in 2024 \u2014 <\/span>or even sooner<\/span><\/a>. \u201cYou\u2019re likely not going to be able to get out of that mortgage without a massive penalty at any point in time,\u201d Friesen says of going fixed.<\/span>
<\/span><\/p>\nHow Are Homeowners Handling Higher Rates?<\/b><\/h2>\n
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<\/span>She had secured her current variable-rate mortgage on her one-bedroom condo by the <\/span>Humber Bay<\/span><\/a> shortly after the BoC\u2019s first rate hike last year. The rate was around 1.75%, and monthly payments worked out to about $1,250 a month. Today, she shells out $2,000 a month to meet her 5.59% rate.<\/span>
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<\/span>In response, she says, she\u2019s trying to be smarter with budgeting. \u201cI take my lunch more to work,\u201d Jillian explains. \u201cI\u2019m actually cooking more and freezing stuff so I don\u2019t have to necessarily go out as much and [I\u2019m] being conscious of that.\u201d\u00a0<\/span><\/p>\n