{"id":25394,"date":"2025-02-26T15:15:40","date_gmt":"2025-02-26T23:15:40","guid":{"rendered":"https:\/\/www.roryc.ca\/blog\/?p=25394"},"modified":"2025-02-27T10:18:53","modified_gmt":"2025-02-27T18:18:53","slug":"bc-homeowners-facing-the-prospect-of-higher-mortgage-payments-plan-to-reduce-discretionary-spending","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2025\/02\/bc-homeowners-facing-the-prospect-of-higher-mortgage-payments-plan-to-reduce-discretionary-spending\/","title":{"rendered":"BC Homeowners Facing The Prospect of Higher Mortgage Payments, Plan to Reduce Discretionary Spending"},"content":{"rendered":"<p style=\"text-align: justify;\">A good chunk of BC homeowners may be tightening their purse strings this year.<\/p>\n<p style=\"text-align: justify;\">That\u2019s according to a Thursday survey from Royal LePage, which found that West Coast residents facing higher mortgage costs plan to cut back on travel and other discretionary spending.<\/p>\n<p style=\"text-align: justify;\">The real estate company\u2019s report revealed that 53% of British Columbians, and 43% of Vancouverites, renewing the mortgage on their primary residence in 2025 said they expect their monthly mortgage payment to increase.<\/p>\n<p style=\"text-align: justify;\">Of those people, 82% said an increase will put financial strain on their household. 60% of those anticipating financial pressure said they plan to reduce discretionary spending, while 42% said they plan to reduce or eliminate travel.<\/p>\n<p style=\"text-align: justify;\">\u201cIn general, there\u2019s going to be a lot of folks that ultimately had mortgages issued at those pandemic rates, sub-1.5%, that are coming to renewal now,\u201d said Adil Dinani, principal of the Dinani Group, Royal LePage West Real Estate Services.<\/p>\n<p style=\"text-align: justify;\">\u201cAmongst homeowners right now, there\u2019s a little bit of nerves around what an approval looks like today in terms of where borrowing costs and interest rates are.\u201d<\/p>\n<p style=\"text-align: justify;\">Dinani said the current monetary policy easing cycle could provide some relief. The Bank of Canada\u2019s key interest rate sits at 3% after a succession of reductions from a high of 5% last seen in spring 2024. Dinani forecasts it to come down another 100 or so basis points, although a recessionary trade war with the US could cause it to sink even lower.<\/p>\n<p style=\"text-align: justify;\">Meanwhile, he said the federal stress-test mechanism on fixed-rate mortgages, at 2% higher than posted rates, creates a safety net or buffer for homeowners who are looking to renew their mortgage.<\/p>\n<p style=\"text-align: justify;\">\u201cThey were [stress-tested] at essentially today\u2019s rates, or slightly below today\u2019s rates, in terms of what they can afford based on current income and current debt levels,\u201d he said.<\/p>\n<p style=\"text-align: justify;\">\u201cI think that\u2019s going to ..\u2026 save the market in terms of the concern around more delinquencies or folks not being able to renew or make those higher payments. I think that\u2019s something that sometimes goes forgotten \u2026.. there is that safety mechanism in the marketplace.\u201d<\/p>\n<p style=\"text-align: justify;\">There is no such stress test for variable-rate mortgages. The prime lending rate, which determines rates for variable loans, is currently 5.2%. Dinani said he expects prime to be in the low fours by the end of the year.<\/p>\n<p style=\"text-align: justify;\">As renewal deadlines approach, a consumer\u2019s choice between a fixed or variable product will depend on their risk appetite, he said. On one hand, some are going variable due to the threat of tariffs and international trade tensions, which could bring down the cost of money to emergency lows.<\/p>\n<p style=\"text-align: justify;\">On the other hand, there may be less appetite for variable products owing to high volatility in the recent past.<\/p>\n<p style=\"text-align: justify;\">\u201cWe saw the largest escalation of interest rates in three decades over the previous two years, and I think people that were in that market, in a variable product \u2026.. they may be more inclined to go fixed, just because people\u2019s expectations of the future are generally coloured by their experience in the immediate past.\u201d<\/p>\n<p style=\"text-align: justify;\">Dinani said homeowners facing renewal at a higher rate are resourceful and will find ways to meet their new monthly payment, in order to participate in medium- to long-term price appreciation.<\/p>\n<p style=\"text-align: justify;\">&#8220;They&#8217;ll find a way to perhaps save less or dip into those savings, but I think Canadians are going to find a way to make the higher rates work,&#8221; he said.<\/p>\n<p><a href=\"https:\/\/www.biv.com\/news\/real-estate\/mortgage-renewals-set-to-squeeze-bc-households-survey-finds-10257852\" target=\"_blank\" rel=\"noopener\">Mortgage Renewals Set to Squeeze BC Households, Survey Finds<\/a> by Jami Makan | BIV<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A good chunk of BC homeowners may be tightening their purse strings this year. That\u2019s according to a Thursday survey from Royal LePage, which found that West Coast residents facing &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2025\/02\/bc-homeowners-facing-the-prospect-of-higher-mortgage-payments-plan-to-reduce-discretionary-spending\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,13],"tags":[],"class_list":["post-25394","post","type-post","status-publish","format-standard","hentry","category-mortgage","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>BC Homeowners Facing The Prospect of Higher Mortgage Payments, Plan to Reduce Discretionary Spending &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2025\/02\/bc-homeowners-facing-the-prospect-of-higher-mortgage-payments-plan-to-reduce-discretionary-spending\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"BC Homeowners Facing The Prospect of Higher Mortgage Payments, Plan to Reduce Discretionary Spending &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"A good chunk of BC homeowners may be tightening their purse strings this year. 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