According to a new survey from Manulife Bank, nearly 75% of Canadian homeowners would have difficulty paying their mortgage every month if their payments increased by as little as 10%. And, given that the average house in Canada costs roughly $200,000 and carries a monthly mortgage payment of $1,000, that means that most Canadians couldn't incur and $100 hike in their monthly mortgage payments without possibly going under. Per CBC:
The bank polled 2,098 homeowners — between the ages of 20 to 69 with household incomes of $50,000 or higher — online in the first two weeks of February.
Fourteen per cent of respondents to Manulife's survey said they wouldn't be able to withstand any increase in their monthly payments, while 38 per cent of those polled said they could withstand a payment hike of between one and five per cent before having difficulty. An additional 20 per cent said they could stomach a hike of between six and 10 per cent before feeling the pinch.
Add it all up, and that means 72 per cent of homeowners polled couldn't withstand a hike of just 10 per cent from their current record lows.
Of course, such a huge sensitivity to small budget fluctuations isn't a great sign when we're in the midst of record-low interest rates and about to enter a period of sustained hikes.
"What these people don't realize is that we're at record low interest rates today," said Rick Lunny, president and CEO of Manulife Bank.
If mortgage rates increase by as little as one percentage point, some borrowers could be facing a hike of 10 per cent on their monthly bills. A bigger mortgage rate hike would bring more pain.
Meanwhile, 45% of millennials in the same survey said they had to borrow money from their parents to purchase their home and 25% admitted they have no savings.
Well, at least Americans aren't the only ones that have no idea how to save.