Looming mortgage renewals and mushrooming home insurance hikes are set to put the squeeze on B.C. homeowners in 2024.
“We cringe every time we do a renewal now because every year is the same. It was 20 per cent last year for John Smith and its 20 per cent this year,” said David Feenie with InsureBC (Lee & Porter) Insurance Services Inc.
While insurance comparison website My Choice Financial Inc. concluded home insurance prices increased by 7.63 per cent and replacement costs increased by 2.82 per cent between January 2023 and January 2024, Feenie took issue with those figures.
“I'm just looking at some of the renewals that I did in March and April. … There's somebody that's got three homes of value and last year they paid about $15,500 for their insurance. Their renewal was $21,000, which is a 29 per cent increase.”
As insurance prices climb, an Equifax Canada report is raising alarms that consumers in B.C. fell behind mortgage and credit card payments in the fourth quarter of 2023. In addition, the report shows that B.C.’s mortgage delinquency rate rose by 62.2 per cent with a 52.3 per cent increase Canada-wide in the same quarter.
“We've come out of now two years since all these rapid rate hikes and it's a big difference if you're renewing today and possibly started in 2019,” said Marci Deane, a North Vancouver mortgage broker and president of the B.C. chapter of the Canadian Mortgage Brokers Association.
“The renewal conversations [now] are different than in my 17 years, we're having more conversations around, ‘What does your budget look like? How much is left at the end of the month? Or is there anything left? Have you accumulated debt outside your mortgage?”
Watercooler conversations have shifted from the weather to topics like inflation and what Bank of Canada governor Tiff Macklem will do next, she said.
“People would glaze over in the past if I started talking about the five-year bond yield. Now they're watching and they go, ‘Oh, I saw the bond yield was down,’” she said.
While the Equifax numbers show the weight of interest rates and inflation on households, Deane said these numbers look more alarming than they are.
“Delinquencies on mortgages … are super low. Canadians pay their mortgages,” she said.
Vancouver’s delinquency rate is 1.07 per cent as of the fourth quarter of last year, with B.C.’s delinquency rate at 1.19 per cent, according to Equifax.
Insurance Bureau of Canada national director Rob de Pruis attributes the rise in home insurance to several factors.
“Canada is becoming a riskier place,” said de Pruis, who specializes in consumer and industry relations.
“And we have some compounding factors that are influencing and putting cost pressure on people's premiums. These are things like the inflation and interest rates, labour and supply challenges, materials price increases, global reinsurance costs and other expenses.”
The Insurance Bureau of Canada is also seeing an increase in the frequency and severity of severe weather that's increasing the overall claims costs.
“In the early 2000s, the insurance industry paid out on average annually [of] about $675 million a year on severe weather from these events across the country. The last two years, the insurance industry has now paid out over $3 billion in severe weather from these events across the country,” he said, adding that the Okanagan and Shuswap Lake wildfires were the costliest insured event in the province’s history.
