Garry Marr
Province

A new report from the country’s mortgage brokers suggests up to 375,000 Canadians with home loans are “challenged” by current rates and that figure would more than double if interest rates climb to 5.25 per cent.

The report comes on the same day Canada Mortgage and Housing Corp. said builders continue with new home construction surpassing the 200,000 level in April on an seasonally adjusted annualized basis — levels not seen since 2008.

“I think overall the message is that we are being prudent and doing well. There are a lot of stats to support that,” said Jim Murphy, chief executive of the Canadian Association of Accredited Mortgage Professionals, whose study done in April found a further 475,000 mortgage holders would have trouble making payments if rates rose to 5.25 per cent.

According to the group, there are 9.3 million homeowners in Canada and about 5.55 million have mortgages. Of concern is the number of consumers with variable rate mortgages, now as low as 1.75 per cent, who could be affected if rates rise.

Last month, the government moved to push people into fixed-rate mortgages by requiring anybody borrowing for a term of fewer than five years to qualify based on the posted rate — now 6.1 per cent. Consumers who lock in for a term five years or longer can qualify based on the rate on their actual contract.

The CAAMP survey found that while 65 per cent of those borrowing have gone to a fixed rate, 29 per cent still remain variable with the rest having a mixed mortgage. Of the 475,000 who could be vulnerable if rates rise, 275,000 are in variable rates.

The housing market also continues to get a boost from consumers hurrying to buy homes in Ontario and B.C. before new taxes kick in.

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This entry was posted on Tuesday, May 11th, 2010 at 10:42 am and is filed under Real Estate Related. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.