Interest rate spike hits Simcoe Muskoka homeowners hard

Many Simcoe Muskoka residents are struggling to get by with the rising cost of living.

As gas prices reach record highs, groceries climb in value, and other everyday essentials see a bump—interest rates are also climbing.

The Bank of Canada remains on a rate-hike path as it tries to tame inflation, which is now at a 31-year high, at 6.8 per cent.

Two weeks ago, the bank increased its interest rate to 1.5 per cent.

The increase has left some Barrie brokers wondering what the future holds for current and future homeowners just meeting payments.

"Over the next three to five years, what you're going to see are people really starting to struggle when they come up for renewal," said Steph Quenneville, owner and broker of Mortgage Sense.

He said the growing rates could lead to people claiming bankruptcy or, even worse, having their homes foreclosed.

"At renewal, you may not be able to borrow more, so limit your spending in the next little while," said Quenneville from his downtown office.

Amanda Harper has owned her Barrie home since 2016 before the market began to surge in the County. She said as a mother of five children under the age of nine, she needs to be at home to take care of them, relying on her husband's income to pay the mortgage.

"With our mortgage coming up for renewal at some point is definitely a concern," said Harper.

The young mother said they had been forced to cut back on expenses such as groceries and gas. Harper said her husband now bikes to work to save on fuel.

"Do I think we will have to sell our house? No. But I do think it will make it harder," she said.

Manulife Bank of Canada recently released a study suggesting nearly one in four homeowners worry they will have to sell their home if interest rates continue to climb.

The survey taken over seven days in April found that 18 per cent of homeowners polled are already struggling to afford their homes.

With files from The Canadian Press