87% of Canadian Homeowners Have an Emergency Fund<\/strong><\/h2>\n\n\n\nFor the past two years, we\u2019ve asked Canadians<\/a> how soon they would run out of money and be unable to pay the bills if they lost their job. In 2020, 78% of people would run out of money in 90 days or less. In 2021, 76% said the same. This year, 83% of respondents would be able to go at least 30 days before running out of money to pay their bills<\/strong>. <\/p>\n\n\n\n![\"How](\"https:\/\/www.zolo.ca\/blog\/wp-content\/uploads\/2022\/10\/105000-Financial-Literacy-2022_Superside_D3_Image-1-1024x1039.png\")
<\/figure>\n\n\n\nOf the 83% with savings, 24% have more than 180 days worth of money to put towards their essentials if they were to lose their job. During the pandemic, the Bank of Canada found that Canadians were spending less<\/a> than in years past. This is due to travel and entertainment services closing \u2014 or because they were being cautious about money and staying healthy. In turn, they found Canadians had saved around $5,800 per person in 2020. We couldn\u2019t spend, so we saved! And we put those savings into our emergency funds. <\/p>\n\n\n\nPre-pandemic, a 2019 Refresh Financial survey<\/a> found that 49% of Canadians had no savings for an emergency. In 2020, a similar Ipsos survey<\/a> by Global News found that three in 10 Canadians wouldn\u2019t be able to pay their bills if they lost their job due to COVID-19. But, now that we\u2019ve been through many unexpected emergencies and a few years of reduced ability to travel and spend on non-essentials, Canadians have changed their savings habits.<\/p>\n\n\n\nHow Much Do Homeowners Have Saved?<\/h3>\n\n\n\n
Our survey results found that most Canadian homeowners have an emergency fund, and they\u2019ve saved a surprising amount. Only 11% of homeowners don\u2019t have an emergency fund, and 28% of respondents have more than $10,000 saved.<\/p>\n\n\n\n![\"Emergency](\"https:\/\/www.zolo.ca\/blog\/wp-content\/uploads\/2022\/10\/How-much-do-Canadian-homeowners-have-in-emergency-funds-1024x647.png\")
<\/figure>\n\n\n\n\u201cHomeownership is costly,” says Jordann Kaye, spokesperson for Zolo. “Unexpected expenses can range anywhere from a few hundred dollars to replace a broken appliance to tens of thousands of dollars to repair a rotting roof or remedy a leaking basement.\u201d <\/p>\n\n\n\n
She says it\u2019s often more than the average Canadian can easily absorb within their budget. For that reason, Kaye suggests that a plan to deal with unexpected expenses, like an emergency fund, can be useful. Luckily, Canadians are on track. <\/p>\n\n\n\n
Did Homeowners Save for Rising Mortgage Rates? <\/strong><\/h2>\n\n\n\nEmergency savings may come in handy for many homeowners soon because many are about to have bigger concerns than whether they can afford emergency repairs. Some Canadians could struggle to afford their new mortgage payment after they renew their mortgage because interest rates have been steadily rising.<\/p>\n\n\n\n
The Bank of Canada\u2019s (BOC) interest rate strongly influences mortgage renewal rates. At the start of 2022, the BOC interest rate was 0.25%. It\u2019s now at 3.75%, with the most recent BOC increase<\/a> on October 26, 2022. These increased rates have affected mortgage rates. For example, according to Ratehub.ca<\/a>, the average 5-year fixed discounted mortgage rate was 1.39% in February 2021. Today, that rate is 4.69%.<\/p>\n\n\n\nRelated content<\/p>
What Does Real Estate Look Like for the Rest of 2022?<\/a><\/p><\/section>\n\n\n\nAn increase of a few percentage points may not seem like a big deal. But that increase changes a mortgage payment for a $5,000 loan amortized over 25 years from $1,973 to $2,833. That’s a difference of $860!<\/p>\n\n\n\n
In short, higher rates equate to higher monthly mortgage payments at renewal. <\/p>\n\n\n\n
Canadian Homeowners Worry About Mortgage Renewal<\/h3>\n\n\n\n
if you\u2019re up for mortgage renewal in the next few years, you could find yourself in a tight spot financially. Canadians who are unprepared for an increase in their mortgage payment could find themselves scrambling to make ends meet. Most Canadians are well aware of the risk of rising rates. But still, they worry about being able to afford their mortgage payments at renewal.<\/p>\n\n\n\n
Lana Brown is one such Canadian. She owes $411,000 on her Calgary<\/a>, Alberta condo. Her mortgage is up for renewal at the end of March 2023. \u201cWe were going to wing it and wait,\u201d says Brown. \u201cBut now we made an appointment for early renewal.\u201d <\/p>\n\n\n\nBrown says she\u2019s planning to shorten this renewal period from their typical five-year fixed rate to a two- or three-year fixed-rate mortgage. This is in hopes that their balance will be much lower or the interest rates settle by the next renewal.<\/p>\n\n\n\n
Brown isn\u2019t alone. When we asked homeowners who will renew in the next two years whether higher rates impact their ability to afford their mortgage, 88% said these increases would at least somewhat impact them.<\/p>\n\n\n\n![\"\"](\"https:\/\/www.zolo.ca\/blog\/wp-content\/uploads\/2022\/10\/Mortgage-rates-for-Canadian-homeowners-1024x633.png\")
<\/figure>\n\n\n\n\u201cWe are nervous about the rate hikes,\u201d says Tori Nowoczin, a detached homeowner in Okotoks, Alberta. She and her partner are up for mortgage renewal this January. \u201cIt seems that our wages don’t go as far anymore, so there’s certainly concern about how to manage a higher mortgage.\u201d<\/p>\n\n\n\n
How to Prepare For Higher Mortgage Interest Rates<\/strong><\/h2>\n\n\n\nIf you\u2019re one of the Canadian homeowners whose mortgage is up for renewal, let\u2019s go over the top things you can do to prepare financially.<\/p>\n\n\n\n
First off, working with an experienced mortgage broker is key. \u201cThey\u2019ll holistically review your financial position, cash flow, budget and financial goals,” says Eden Simari, senior mortgage broker. She says they do this to understand how rising interest rates may impact your current mortgage, a new transaction or upcoming renewal.<\/p>\n\n\n\nRelated content<\/p>
<\/figure>\n\n\n\nOf the 83% with savings, 24% have more than 180 days worth of money to put towards their essentials if they were to lose their job. During the pandemic, the Bank of Canada found that Canadians were spending less<\/a> than in years past. This is due to travel and entertainment services closing \u2014 or because they were being cautious about money and staying healthy. In turn, they found Canadians had saved around $5,800 per person in 2020. We couldn\u2019t spend, so we saved! And we put those savings into our emergency funds. <\/p>\n\n\n\n Pre-pandemic, a 2019 Refresh Financial survey<\/a> found that 49% of Canadians had no savings for an emergency. In 2020, a similar Ipsos survey<\/a> by Global News found that three in 10 Canadians wouldn\u2019t be able to pay their bills if they lost their job due to COVID-19. But, now that we\u2019ve been through many unexpected emergencies and a few years of reduced ability to travel and spend on non-essentials, Canadians have changed their savings habits.<\/p>\n\n\n\n Our survey results found that most Canadian homeowners have an emergency fund, and they\u2019ve saved a surprising amount. Only 11% of homeowners don\u2019t have an emergency fund, and 28% of respondents have more than $10,000 saved.<\/p>\n\n\n\n \u201cHomeownership is costly,” says Jordann Kaye, spokesperson for Zolo. “Unexpected expenses can range anywhere from a few hundred dollars to replace a broken appliance to tens of thousands of dollars to repair a rotting roof or remedy a leaking basement.\u201d <\/p>\n\n\n\n She says it\u2019s often more than the average Canadian can easily absorb within their budget. For that reason, Kaye suggests that a plan to deal with unexpected expenses, like an emergency fund, can be useful. Luckily, Canadians are on track. <\/p>\n\n\n\n Emergency savings may come in handy for many homeowners soon because many are about to have bigger concerns than whether they can afford emergency repairs. Some Canadians could struggle to afford their new mortgage payment after they renew their mortgage because interest rates have been steadily rising.<\/p>\n\n\n\n The Bank of Canada\u2019s (BOC) interest rate strongly influences mortgage renewal rates. At the start of 2022, the BOC interest rate was 0.25%. It\u2019s now at 3.75%, with the most recent BOC increase<\/a> on October 26, 2022. These increased rates have affected mortgage rates. For example, according to Ratehub.ca<\/a>, the average 5-year fixed discounted mortgage rate was 1.39% in February 2021. Today, that rate is 4.69%.<\/p>\n\n\n\n Related content<\/p> What Does Real Estate Look Like for the Rest of 2022?<\/a><\/p><\/section>\n\n\n\n An increase of a few percentage points may not seem like a big deal. But that increase changes a mortgage payment for a $5,000 loan amortized over 25 years from $1,973 to $2,833. That’s a difference of $860!<\/p>\n\n\n\n In short, higher rates equate to higher monthly mortgage payments at renewal. <\/p>\n\n\n\n if you\u2019re up for mortgage renewal in the next few years, you could find yourself in a tight spot financially. Canadians who are unprepared for an increase in their mortgage payment could find themselves scrambling to make ends meet. Most Canadians are well aware of the risk of rising rates. But still, they worry about being able to afford their mortgage payments at renewal.<\/p>\n\n\n\n Lana Brown is one such Canadian. She owes $411,000 on her Calgary<\/a>, Alberta condo. Her mortgage is up for renewal at the end of March 2023. \u201cWe were going to wing it and wait,\u201d says Brown. \u201cBut now we made an appointment for early renewal.\u201d <\/p>\n\n\n\n Brown says she\u2019s planning to shorten this renewal period from their typical five-year fixed rate to a two- or three-year fixed-rate mortgage. This is in hopes that their balance will be much lower or the interest rates settle by the next renewal.<\/p>\n\n\n\n Brown isn\u2019t alone. When we asked homeowners who will renew in the next two years whether higher rates impact their ability to afford their mortgage, 88% said these increases would at least somewhat impact them.<\/p>\n\n\n\n \u201cWe are nervous about the rate hikes,\u201d says Tori Nowoczin, a detached homeowner in Okotoks, Alberta. She and her partner are up for mortgage renewal this January. \u201cIt seems that our wages don’t go as far anymore, so there’s certainly concern about how to manage a higher mortgage.\u201d<\/p>\n\n\n\n If you\u2019re one of the Canadian homeowners whose mortgage is up for renewal, let\u2019s go over the top things you can do to prepare financially.<\/p>\n\n\n\n First off, working with an experienced mortgage broker is key. \u201cThey\u2019ll holistically review your financial position, cash flow, budget and financial goals,” says Eden Simari, senior mortgage broker. She says they do this to understand how rising interest rates may impact your current mortgage, a new transaction or upcoming renewal.<\/p>\n\n\n\n Related content<\/p>How Much Do Homeowners Have Saved?<\/h3>\n\n\n\n
<\/figure>\n\n\n\nDid Homeowners Save for Rising Mortgage Rates? <\/strong><\/h2>\n\n\n\n
Canadian Homeowners Worry About Mortgage Renewal<\/h3>\n\n\n\n
<\/figure>\n\n\n\nHow to Prepare For Higher Mortgage Interest Rates<\/strong><\/h2>\n\n\n\n
![\"\"](\"https:\/\/www.zolo.ca\/blog\/wp-content\/uploads\/2022\/10\/Generation-canadian-homeowners-1024x881.png\")
<\/figure>\n\n\n\n![\"Boomers](\"https:\/\/www.zolo.ca\/blog\/wp-content\/uploads\/2022\/10\/How-are-boomers-doing-1024x1074.png\")
<\/figure>\n\n\n\n