July 12, 2023 - Toronto, Ontario – Mortgage Professionals Canada
“Let’s face it, we are well into a housing affordability crisis. Canadians’ biggest expense every month is keeping a roof over their head. Today, that became even more difficult.
“The Bank of Canada has again increased the interest rate by a quarter point, bringing it to 5%. This could very well be the straw that breaks many borrowers’ backs. As the voice for mortgage professionals across the country, Mortgage Professionals Canada is deeply concerned about the impact of 22-year high rates on Canadian homeowners, without a clear policy response from decision-makers to address housing affordability.
“Prior to today’s rate hike, the cost of mortgage borrowing had already increased close to 70% since the Bank of Canada’s initial increase last March. When it comes to the direct impact on Canadians from the previous rate hikes, more than three-quarters of people with variable-rate mortgages had already hit their trigger rate, even before the June increase, according to a recent Desjardins report.
“Today’s increase will only add further stress to existing variable-rate holders as well as fixed-rate borrowers when it comes time to renew their mortgage. Recent studies also show that upwards of half of all mortgage borrowers are concerned about their upcoming renewal. When facing questions or concerns with your mortgage, particularly around renewal, a mortgage professional can offer invaluable advice and suggest options suitable for your personal financial circumstances.
“We acknowledge that managing inflationary pressures is a crucial task for the Bank of Canada and the federal government. However, there is a larger issue when it comes to the lack of policy response to the housing affordability crisis hitting Canadians right across the country.
“With interest rates projected to remain at this elevated level well into 2024 by economists, we urge decision makers to consider the long-term plan to keep the dream of homeownership alive. Monetary policy alone cannot be relied upon to address the affordability challenges faced by Canadians.
“To help make homeownership more affordable and level the playing field for all homebuyers, the federal government could introduce a return to 30-year amortization periods for insured mortgages. It could also eliminate the stress test on mortgage transfers, switches and renewals to help Canadians find the financing solutions that best fit their budget. Finally, the government can act on its commitment to increase the insured mortgage cut-off from $1 million to $1.25 million, and index it to inflation to better reflect today’s housing prices.
“A permanent National Housing Roundtable comprised of these groups, established by the federal government, could also help ensure effective action. We need all governments to work together, along with industry and civil society to help keep the dream of homeownership alive in Canada.”
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Mortgage Professionals Canada