Surrey man fears rising rates could force home sale

While the Bank of Canada pushes interest rates higher to fight inflation, many families find themselves having tough financial conversations.

One CityNews listener is opening up about his situation, with his mortgage payments skyrocketing in recent months.

#BREAKING NEWS: Bank of Canada raises interest rate to 3.75% https://t.co/DBKk6jr9NU

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Rob and his wife saved up for six years to buy a home in Surrey, and with the help of family, they made the dream possible just over a year ago.

CityNews has verified Rob’s identity but has agreed to only use his first name given he’s discussing his personal finances.

Rob and his wife have an adjustable-rate mortgage and say their payments have gone up by $2,000 a month over the last six months or so.

It’s getting so bad, he fears he might have to eventually sell his home — a heartbreaking possibility made all the worse given he’s also got three kids.

“I couldn’t imagine having to stake a ‘for sale’ sign in the front of my home, because I can’t afford the bills anymore, and I’m hoping it doesn’t come to that,” Rob told CityNews in an interview. “We’ve somewhat planned for this, to be hit, to a certain extent.”

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Rob told CityNews he works two jobs and his wife also works. They had a rainy day fund before the interest rate hikes began — and they’ve been using it to absorb some of the extra costs. But he knows those savings aren’t unlimited.

“We’re just basically looking at our options,” Rob said, acknowledging the extra hours he’s working will mean less time with his kids. “It’s work harder, work more. I’m just going to be out of the home more often working…we just have to explore the options to hold on to the home.”

Despite everything, Rob considers himself fortunate, yet on the brink.

“We’re in a very fortunate spot, my wife and I, that we’d saved a rainy day fund,” Rob said. “But the more this goes up, and if it doesn’t stop here, that rainy day fund just isn’t going to be enough.”

Even people in the mortgage industry are feeling the pain.

Reza Sabour is a Senior Mortgage Advisor with TMG The Mortgage Group and his payments have gone up $1,000 a month over the last six months.

“I could have locked in many rate hikes ago, [and] I did think that rates would increase the way that they have, I just did not assume they would increase with each rate hike being so large,” Sabour told CityNews. “I think that’s what took me off guard. I was expecting 0.25 [per cent], 0.5 each time.”

Sabour notes that historically, those paying variable rate mortgages usually end up paying less than those with a fixed rate, adding this period is a bit unusual.

For some of Sabour’s clients, he tells them when it comes to making a decision to choose a fixed or adjustable mortgage, you have to know your own tolerance for risk and change. For some people, certainty has its own value.

“Fixing is not a bad idea for some people,” Sabour said. “As I tell my clients, you can almost forget the math. You also have to price in your peace of mind and your mental health. You have to price those things as actual valuable assets in your life. How much is your mental health worth to you? How much is your peace of mind worth to you as an actual priced in category in this decision? Some people will say ‘that’s actually more valuable to me than the math. The math may still be on the side of the variable in the long run, but I just can’t sleep at night anymore and I’d rather fix it now and it is what it is.'”

Sabour says some people are choosing to get into fixed rates, but on a personal level, he’s holding off in the hopes interest rates eventually reverse course.