Between 2024 and 2026, 2.2 million Canadian families will be affected by rising interest rates when renewing their mortgage loans. According to the Canada Mortgage and Housing Corporation, about 300,000 homeowners have only renewed their mortgages in a higher interest rate scenario.

Mariela Izarra is one of the homeowners who had to "tighten their belts" in order to continue paying for the home they bought five years ago in the Montreal suburbs.

Izarra had to renew her mortgage in December, and she should make her first payment in February 2024. Based on the advice of a mortgage advisor, after doing a lot of work and obtaining information from different banks, the mother of two and her husband decided to transfer their mortgage loan to another financial institution that offered them a more attractive rate.

Mariela Izarra also commented in an interview saying: "We had a five-year fixed-rate mortgage. That's what we decided when we bought, because although the rate was higher, we wanted to feel peace of mind in case it increased." with RCI.

The young mother said that when they started exploring the options offered by different banks, they realized there was a kind of price war, as they initially considered a financial institution different from the one that gave them the mortgage loan, and when they informed the bank they dealt with that they were going to switch entities, it offered them a similar rate. This gave them an advantage to go to the new financial institution and demand a further interest rate reduction to switch, which they eventually achieved, so they renewed their mortgage but this time at a much higher rate: it rose from 3.4% to 5.4%, fixed again for five years.

The direct impact on the ability to save...

During the first five years of their mortgage, this family was able to pay off the debt by making additional payments to reduce their mortgage loan consumption. This was to their advantage when renewing the mortgage, as the 58% increase in the interest rate represents an increase of about $400 in their monthly installments.

Although the outlook today is not as complicated as they expected with the increases in the Bank of Canada's benchmark interest rate that started in March 2022 and continued into 2023, this Latin Canadian admitted she is still worried.