Have interest rates forced Canadians to sell their homes?

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Higher mortgage payments during the Bank of Canada’s tightening cycle have forced only a small number of Canadians to take drastic measures and sell their home.

A survey released last week from the real estate website Wahi found that 11 per cent of homeowners planning to sell are doing so because of the cost of living, while 37 per cent are looking to downsize and 25 per cent are looking to upsize.

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“While it’s a challenging time whenever someone is forced to sell their home, the survey results indicate that this remains relatively uncommon in the Canadian housing market compared to other reasons for selling,” Wahi chief executive Benjy Katchen said in the report.

“The Bank of Canada’s recent rate cut should also provide some relief for homeowners.”

The desire for Canadian homeowners to downsize was no surprise, due to Canada’s aging population, the report noted.

Overall, 69 per cent of those looking to downsize are aged 55 and up. On the other hand, 94 per cent of those looking to upsize are younger than 55.

While interest rates have forced few Canadian mortgage holders to take drastic measures, times have been challenging, especially those with the variable-rate option.

In 2022, when the interest rate was 3.75 per cent, the Bank of Canada estimated that 50 per cent of variable rate borrowers had hit their trigger rate, meaning monthly mortgage payments were only paying off the monthly interest and not paying down the loan.

On June 5, the Bank of Canada trimmed rates for the first time in more than four years, which gives those with a variable-rate plan some relief.

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Estimates from the real estate website Zoocasa show the average mortgage holder in Vancouver saves $166.20 per month, while folks in Regina save an average of $76.60 per month.

While it might not seem like much, more relief is expected in the coming months, as most economists predict at least another two interest rate cuts by the end of 2024, with the next coming as soon as July.

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In a bad sign for Canada’s energy hub, stocks appear on the rebound in most Canadian industries, except the oil and gas sector. Bloomberg reports stock issuances in the Alberta oil patch have dried up to the point where some financial institutions, including Stifel Financial Corp. and Raymond James Ltd., have begun scaling back their operations in Calgary. 

Overall, there have been just 15 equity offerings in Canada’s energy sector thus far this year and it will need a dramatic uptick to match last year’s $7.4 billion.

• United States markets closed for Juneteenth National Independence Day
• Bank of Canada Summary of Deliberations from June 5 meeting
• Today’s Data: Canada’s Teranet-National Bank Home Price Index, U.S. NAHB Housing Market Index

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Managing finances can be especially difficult for single parents as they look to face the burden of child rearing on a single income. Despite the challenges they face, there are several strategies they can employ to help achieve their financial goals. Read more. 

Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you wondering how to make ends meet? Drop us a line with your contact info and the gist of your problem and we’ll try to find some experts to help you out, while writing a Family Finance story about it (we’ll keep your name out of it, of course). If you have a simpler question, the crack team at FP Answers, led by Julie Cazzin, can give it a shot.

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his mortgage rate page for Canada’s lowest national mortgage rates, updated daily.

Today’s Posthaste was written by Ben Cousins, with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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