July 7, 2023
PayProp Insights

Homeowners and renters brace for Bank of Canada rate hike

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Many Canadians already struggling financially are now facing the prospect of another interest rate hike.

The Bank of Canada recently raised its overnight lending rate to 4.75%, which led to a rise in 5-year variable mortgage rates, reaching as high as 5.80%.

That will put further pressure on the 45% of mortgage holders and 54% of renters who are finding it “tough” or “very difficult” to manage their monthly housing payments, according to a poll conducted by Angus Reid Institute.

Separate research from the Canadian Rental Housing Index found that 38% of renter households in Ontario are overspending on rent and utilities, and 15% spend more than half of their income on such necessities.

With rumours of another Bank of Canada rate hike in July, homeowners and renters looking to renew their leases could come under even greater financial pressure.

Among these homeowners are landlords, who are left with limited options. In order to offset higher expenses, they could increase rental rates, but that could strain relationships with tenants and increase the risk of non-payment. Alternatively, some landlords may be forced to sell their properties, which could make the rental market even more challenging.

Property managers can be a great source of advice and assistance for landlords, and by taking proactive measures, they can safeguard their own businesses.

More renters headlines

As mortgage costs explode, many small landlords are turning to unlawful rent increases – Storeys

Over two thirds of Canadians are planning on waiting until mortgage rates drop to purchase a home – Bank of Montreal

Canada's household debt is highest in the G7 – PayProp

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