A recent report by RBC Capital Markets has shed light on a stark reality: approximately $900-billion worth of Canadian mortgages are set to renew between 2024 and 2026. With interest rates climbing over the past year, many could face a considerable hike in their mortgage payments — a “payment shock.”
For those with variable-rate mortgages, the renewal period could result in an increase in payments from 32% in the near term to as much as 76% by 2026, if interest rates remain around 6%. This could have a significant impact on household budgets and spending power.
Despite these daunting numbers, there’s room for strategic planning. ComFree Realty recommends several steps to mitigate the impact:
1. Evaluate Your Mortgage Type: If you have a variable-rate mortgage, consider the implications of rising interest rates on your renewal.
2. Plan Ahead: Start planning for these potential increases now by adjusting your budget and saving where possible.
3. Consult with Professionals: Speak to financial advisors or your mortgage professional about options like increasing monthly payments or extending your loan’s amortization to soften the future financial hit.
The silver lining is that Canadian banks and lenders are proactive. They’re working with clients to find manageable solutions, such as revising payment plans to help homeowners navigate through these changes without drastic consequences.
While the coming years will undoubtedly present financial challenges for homeowners, with careful planning and the right guidance, it’s possible to weather the mortgage renewal storm. ComFree Realty is committed to providing the advice and support you need to make informed decisions about your home and finances.
Need more guidance on managing your mortgage in a changing economy? Visit our mortgage management resources or contact a ComFree Team today.
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