2023-11-12 10:00:00
That they are fixed changes nothing: lives find themselves compressed between the jaws of the vise of rates.
Posted at 5:00 a.m.
Like that of Frédéric Massé.
“My mortgage renewal is fast approaching, next July, and let’s just say that it sometimes prevents me from having a good night’s sleep…” expresses the 52-year-old man.
He leads a well-regulated life, however, without excesses or excesses. “I’m not a spendthrift, I don’t take big trips once or twice a year,” he says. I have zero debt, I don’t owe anything to anyone. My only debt is my house. »
He acquired it in July 2019, a pretty little semi-detached house, nestled in a wooded area of Val-David. Here too, nothing excessive: the loan barely exceeded $250,000.
He wanted to protect himself from interest rate surges. “I was on a fixed rate of 2.84% over 5 years,” he says. I thought it was good. »
The monthly payment was around $1,100. It was all the more reasonable as the acquisition corresponded to a turning point in his life.
He had worked for around fifteen years as a carpenter, for a salary that was much more comfortable than his working hours. A divorce and his parental responsibilities – “I’m a single parent,” he says – prompted him to slow down.
“I needed a drastic life change, so I returned to my loves. »
Customer service in retail. “I am the manager of a store in the Laurentians. I don’t have a huge salary. Maybe around $50,000 a year. »
For four years, a starry mortgage sky protected his sleep.
“But there, there is like a sword of Damocles on your head. I said to myself: interest rates have risen, I’m going to do some little calculations on mortgage calculators on the web. »
Nightmare.
“I was like: oh boy! $400 to $500 more per month! For nothing ! I don’t have a girl that comes to the end. » He gets nothing more for this amount which considerably reduces his budget.
In a few weeks, maybe a month or two, I’m going to start researching a mortgage renewal. You have to start six months in advance, it seems. This is where I am. I need to find a way to make $400 to $600 a month more.
Frédéric Massé
Frédéric Massé, however, refuses to pose as a victim. “I’m not complaining, in the sense that I have solutions. I’ll find them, the $400 or $500 a month. I asked for a raise at my job for exactly this reason. »
“I still have tools in my trunk, to make a play on words,” he adds. A carpenter’s toolbox helps a lot because it allows me to do small jobs from time to time, to make ends meet. »
However, the storm surge from Hurricane Mortgage hits far into its interior lands.
Small carpentry jobs will perhaps smooth out the budgetary roughness… “But it impacts my quality of life, my leave,” he emphasizes. I have a blonde in Quebec. We try to see each other as much as possible, but if I have to take weekends off to do jobs, that’s time I’m not spending with her. »
His future retirement will also be affected by the storm. He has not contributed to any pension plan since leaving construction. It is now his savings which provide for this.
“I plan to work for another 10 or 15 years, at least until age 65. If I take $400 or $500 out of my budget, that’s at least $300 or $400 per month that won’t go into my pension fund.
“If people talk to me about rising interest rates and fewer hours of sleep, that’s what’s eating into my quality of life: the impossibility of putting a little more aside for a pension fund . They are all communicating vessels. »
The lever and the dominoes
Josée (she asked not to use her last name) also believed that her fixed rate protected her. Error.
“It’s extremely stressful to the point that I don’t intend to wait until it’s hit hard and I’m putting my property up for sale,” she asserts.
She acquired it in December 2020 with a loan equivalent to 80% of its value, at a rate of 1.69%.
“At the very beginning of the pandemic, rates had been very low for a very long time,” she says. My financial planner, given my age, recommended that I use my mortgage as leverage to obtain an additional RRSP loan. I’m a single parent, so I didn’t really have a lot of RRSPs. Almost none, in fact. So that’s what I did. Except that it’s added to the property’s mortgage. »
Three years later, the leverage has turned into a domino effect.
If it happened again today, I would have a $1200 raise. Per month ! With just one income!
Josée
She also uses the Greek metaphor.
“Today, nearing retirement, I simply want to recover my marbles and free myself from this very uncomfortable situation, namely the presence of this sword of Damocles above my head. »
She anticipates the effects of rising rates on the real estate market, which she predicts will make property sales more difficult in the coming years.
Has she consulted mortgage advisors? “Yes,” she replies, “but no one has a crystal ball, and it’s also a question of the ability to manage risk. The older we get, the less tolerance we have, and the more we prefer safer options. »
The solution, she pronounces in a tone where anger and determination mix, “is to sell and find an apartment at a reasonable price”.
Which will also constitute a great challenge.
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