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In-Your-Service

Rising interest rates making it harder for homeowners to pay mortgages

Mortgages in crisis

Bank of Canada governor Tiff Macklem recently provided a stark message to Canadians—the federal government's current and projected spending is not helping the bank's efforts to bring down high inflation and high interest rates.

This position has significant implications for our economy, particularly with mortgages. As Macklem explained: “It’s going to be easier to get inflation down if monetary and fiscal policy are rowing in the same direction”.

The implications of that affirmation are substantial, raising questions about the viability of the current government's economic path, which directly affects the ability of Canadians to secure affordable mortgages and, for many, keep their homes.

In its effort to combat inflation, the Bank of Canada has increased interest rates 10 times in just 19 months, which has raised many mortgage holders’ payments. Since 2015, monthly mortgage payments have increased by 150% for a typical family home.

I recently sent out a mortgage survey to all households across our community and the responses are just starting to come in. So far, the vast majority of responses received from those who have mortgages indicate it has become more difficult and expensive to pay off their mortgages. Some say their mortgages have become so unaffordable, they may lose their homes.

In 2015, the prime minister promised to boost the availability of affordable housing in Canada. However, since then, rents, mortgage payments and the down payment required to buy a home have all doubled. Before 2015, it took 25 years to pay off a mortgage. It now takes 25 years to save for a down payment.

We increasingly see stories across British Columbia about people returning to the rental market because they can't afford their mortgages. A recent Edward Jones Canada survey stated, "Canadians are stuck in a chaotic whirlwind of personal financial stress”.

Many indicators show the extent to which people are struggling. Those include reports of increases in mortgage defaults, forced sales and high-interest alternative lending for those who no longer meet mortgage stress tests but desperately want to keep their homes.

All of this is made worse by a housing crisis that is failing to add new homes. According to the Canada Mortgage and Housing Corporation, housing starts are dropping nationwide, including 26% down in B.C. and 33% down in Kelowna since last year.

I speak to many people involved in construction who say the cost of debt financing due to high interest rates, increasing costs for materials and supplies due to inflation and cost increases with the continuing low Canadian dollar is making it more difficult to go forward with projects.

Macklem did affirm that by focusing on the inflationary consequences of its spending decisions, the federal government would significantly contribute to reducing inflation and the need for high interest rates, providing a way out of our worsening mortgage crisis.

•••

This Remembrance Day, I hope everyone in Kelowna-Lake Country will join me in taking a moment to recognize those who bravely served Canada in times of war, conflict and peace.

We do this to honour and pay tribute to Canadians who made the ultimate sacrifice defending democracy and human rights around the world.

Kelowna’s City Park features the multi-partner community service memorial project, the Field of Crosses. I hope everyone who is able takes the opportunity to honour those fallen soldiers and purchases a poppy, which helps support local veterans and their families.

You can view my Remembrance Day video tribute on my social media platforms as I paid respect at the National War Memorial in Ottawa.

Lest we forget.

If you need assistance with federal programs or have any thoughts to share, feel free to reach out, at 250-470-5075 or at [email protected].

Tracy Gray is the Conservative MP for Kelowna-Lake Country.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.



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About the Author

Tracy Gray, Conservative MP for Kelowna-Lake Country, is her party's critic for Employment, Future Workforce Development and Disability Inclusion

She is a member of the national caucus committee’s credit union caucus, wine caucus, and aviation caucus.

Gray, who has won the RBC Canadian Woman Entrepreneur of the Year Award, and the Kelowna Chamber of Commerce Business Excellence Award, worked for 27 years in the B.C. beverage industry.

She founded and owned Discover Wines VQA Wine Stores, which included the No. 1 wine store in B.C. for 13 years. She has been involved in small businesses in different sectors — financing, importing, oil and gas services and a technology start-up — and is among the “100 New Woman Pioneers in B.C."

Gray was a Kelowna city councillor for the 2014 term, sat on the Passenger Transportation Board from 2010-2012 and was elected to the board of Prospera Credit Union for 10 years.

In addition, she served on the boards of the Okanagan Film Commission, Clubhouse Childcare Society, Kelowna Chamber of Commerce, Okanagan Regional Library and was chairwoman of the Okanagan Basin Water Board.

She volunteers extensively in the community and welcomes connecting with residents.

She can be reached at 250-470-5075, and [email protected]

 



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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