These individuals tend to be in a situation where they can’t refinance or sell their home because the market value of their homes is typically lower than their remaining mortgage balance. As a result, they’re stuck in limbo, unable to make progress on their mortgage payments and unable to move forward.
The issue of mortgage zombies has become an increasing problem in Canada recently. According to Statistics Canada, approximately 10% of Canadian households are currently considered mortgage zombies, meaning that they’ve been in their current state for more than six months. This is a cause for concern as it points to a large number of Canadians who could be in financial difficulty.
The current economic environment is partly to blame for the growth in mortgage zombies. Low interest rates over the past decade have enabled many people to purchase homes that may be too expensive for them to properly maintain in the long run. In addition, rising property values across much of the country in recent years have made it difficult for some homeowners to adequately keep up with their mortgage payments. Furthermore, low levels of job security have led to many homeowners finding themselves unemployed and unable to make their mortgage payments.
In order to address this issue, a number of options are available. One option is for the government to provide assistance for those in need. This could include tax breaks for those struggling to make their mortgage payments or grants to help cover arrears. Another option could be for lenders to adjust mortgage terms, such as increasing the amortization period or reducing the interest rate on the loan. This could help to reduce the monthly payments and make it easier for the borrower to stay afloat.
Finally, there are other approaches that could be taken by individuals themselves, such as debt consolidation or refinancing. However, these methods are usually only viable for those who have a relatively good credit score and are not already too deep into debt.
The issue of mortgage zombies is an important one in Canada today as it points to a large number of people who are at risk of defaulting on their mortgages. The current economic environment has led to many people being unable to keep up their mortgage payments, with increasing numbers of people becoming “stuck” in their current situation. To combat this issue, the government or lenders could create programs to assist those in need, while individuals could also attempt to address their situation through debt consolidation or refinancing. However, it is important to note that action must be taken quickly in order to avoid any potential long-term damage to the individual’s financial stability.
Mortgage zombies are a growing problem in Canada, with Statistics Canada reporting that roughly 10% of Canadian households are considered mortgage zombies, signifying that they have been struggling with their mortgage payments for more than 6 months. This is caused by a variety of factors such as low interest rates leading to overpriced homes, an increase in property values that outpace income growth, and an increase in job insecurity leading to loss of income. To address this, several options exist, such as government taxation breaks or grants to help cover arrears, lenders adjusting mortgage terms such as increasing the amortization period or reducing the interest rate, or individual actions such as debt consolidation or refinancing. However, for any of these options to be effective, it is important to act quickly in order to prevent further damage to an individual’s finances.
This article was contributed on Sep 21, 2023