Almost half of Canadians worry about future mortgage qualification for renewal or purchase

The recent poll by BNN Bloomberg and RATESDOTCA shows that Canadians who are renewing their mortgage or buying a property are often concerned about their ability to qualify and that’s why are looking for alternatives to traditional lenders.

Almost half (47%) of respondents worry about a successful qualification, and 16% say they are extremely concerned. The survey was conducted during the period from March 17 to 19, with 1,527 adult Canadians being polled.

Those who plan to renew or buy during the next 12 months show the highest level of concern, with 70% reporting they are worried about qualifying. In case of the 18-34-year-old respondents, the number reached 60%.

Mortgage rates rose sharply over the previous year, marking one of the fastest rate increase cycles in decades. Today, mortgage rates usually vary from 4.59% to 5.55%, while we saw record low rates in late 2020 and early 2021 – at that point, variable and fixed-rate mortgages didn’t exceed 2%.

That rate hikes raised the average mortgage payment and eroded affordability, even amid drops in home prices in many Canadian cities.

According to RBC, because of higher interest rates, it costs even more now to service the average mortgage than it did just a year ago. Now, borrowers have to spend, on average, 62.7% of their income to cover home ownership costs. It’s the worst rate in history.

Of course, many are searching for other options beyond traditional lenders in an attempt to afford a mortgage or get the necessary qualification for a renewal.

The survey says 29% of respondents are considering alternatives: 12% are asking relatives or friends for money, 11% are thinking about private lenders. The latter often will offer you much higher interest rates, they are not federally regulated, and are mostly used for short-term goals.

With 20+ years of experience as mortgage brokers in Ontario, we can offer our clients not only wide variety of private lenders, but also alternative banks, who are filling the gap between a traditional bank and a private lender. In most cases this could safe you a lot of money due to the lower rates and fees compared to private mortgage, however if you need money quick and with much less questions – private mortgage could be a short-term solution for you.

We have access to many private lenders with different risk appetite, rates and property requirements, so talk to an experienced mortgage broker before accepting first available private mortgage quote!