The scary stats about Canadians' financial woes are relentless.
62% are struggling to make ends meet.
62% are spending way too much on housing.
51% would miss a mortgage payment (or rent) within three months if they lost their job.
Many are living paycheque-to-paycheque.
The online mortgage search and comparison site www.ratefilter.ca did a survey that reveals 62% of Canadians are spending more than 30% of their pre-tax income on housing.
Canada Mortgage & Housing Corporation recommends that an individual, couple or family spend no more than 30% of their pre-tax income on housing in order to stay financially afloat and not run into money troubles down the line.
The number breaks down to Canadians spending an average of 37% of their pre-tax income on housing.
Of course, that's a national average.
Figures are higher in BC, where housing and rent costs are more than anywhere else in the country.
"Many Canadians are house poor, house strapped, cash strapped, however you want to put it," said www.ratefilter.ca co-founder Andy Hill, who is also a MortgagePal broker in Vancouver.
"Some people are spending as much as 70% of their pre-tax income on housing. That means people are getting by only by the skin of their teeth. They're living paycheque-to-paycheque and if they lost their job, 16% of them wouldn't have enough to pay their mortgage or rent in one month and 51% would miss their mortgage payment or rent within three months."
That's why it's also recommended that you have three months worth of salary set aside in an emergency fund for just such a crisis.
But, if we're spending so much on housing and slipping deeper into debt every month then there's no savings going on.
To put this into numbers, if your household income before all taxes and deductions are taken off is say, $65,000 a year, you should spend no more than $19,500 a year on housing.
That breaks down to $1,625 a month for housing, which includes not just your mortgage payment or rent, but other housing expenses such as utilities, house insurance, property tax and-or strata fees.
Considering that monthly median apartment rents are $1,800 in BC and mortgage payments higher, people are overextended, even if household income is $65,000 a year.
A household with dual incomes that tops $100,000 a year still has to be careful not to surge over the 30% recommendation.
If you do pop over the 30% threshold, you run the risk of running out of money every month because life is expensive with the added outgoings of deductions off your paycheque, car payment and gas, groceries, clothing, entertainment and activities.
In fact, the cash is probably gone before you get to any fun, which means many start putting essentials on the credit card, building up a balance and creating a debt problem on top of spending too much on housing.
While there's doom-and-gloom at this end of the spectrum, there's another group that's A-OK.
35% of homeowners are mortgage-free, generally older workers or retirees who've paid off their mortgages over 25 years.
So, it's students, younger workers, young couples and young families that are feeling the crunch the most.
Part of the problem is exorbitant house prices and rents, another part is escalating mortgage interest rates.
You may have been just fine when your mortgage was at an all-time-low 2% variable rate.
But, now that rate is 6%, your monthly mortgage payment has ballooned by 40%, pushing you to the brink.
"Many Canadians feel like they're at the breaking point due to higher interest rates," said Hill.
"Even if the Bank of Canada pauses the rate hike, these borrowers will still be dealing with rates at 20-year highs."
Mortgage interest rates are expected to have plateaued now and possibly start coming down in mid-2024.
But the damage has been done.
Many homeowners and renters will still be strapped.
RateFilter.ca, along with many other groups, are calling on governments for policies and initiatives to make housing more affordable.
However, it's a massive problem that is only being tackled a bit at a time.
