Mortgage & Finance

Home affordability uncertain for many with even small rate hike: report

An interest rate hike of 2 per cent would leave four-in-10 Canadians unsure about whether they could afford their homes, according to a new study from the Bank of Montreal.

The survey, compiled for BMO by Leger Marketing and released Wednesday, found 43 per cent believe an interest hike would either hamper their ability to pay or leave them on unsure footing.

One-in-five Canadians surveyed said a 2 per cent rise would hurt their ability to make mortgage payments, while 23 per cent said they were unsure if a rise would affect them.

The report also found 57 per cent of respondents believe they could still afford their home if interest rates spiked two per cent.

Homebuyers set to win in mortgage-rate war

It was the mortgage shot heard around the country.

BMO fired the opening salvo in a mortgage rate war this week by offering a 5-year fixed rate of 2.99 per cent, the lowest 5-year rate in modern Canadian history. Friday, other banks starting striking back, with TD and RBC cutting 4-year rates to 2.99 per cent.

Experts say other banks are likely to follow suit, with homebuyers being the clear winners.

“In the near term, mortgage rates are on sale, and that’s great news if you’re looking,” said Robert McLister, editor of the Canadian Mortgage Trends newsletter. McLister noted that even some 10-year rates are dropping.