Rising housing prices have caused debt loads to balloon in Hamilton and many homeowners could be in trouble if interest rates continue their upward trend, according to the CMHC.

A new Canada Mortgage and Housing Corp. study has found that Hamilton was worse than the national average when it came to the ratio between debt and disposable income, and the city had the fourth highest rate behind Vancouver, Toronto and Victoria.

Hamilton also saw the biggest debt versus income increase in the country over the past year. Between the second quarter of this year compared to the second quarter of 2017, it shot up by 5.9 points due to "strong growth in mortgage debt and instalment loans."

In a nutshell: The numbers show near record levels of debt across the country, with the situation being somewhat worse and worsening in Hamilton.

"As a result of spinoff effects of the Toronto market, the whole Greater Golden Horseshoe has been impacted by strong housing price increases and that has resulted in first-time buyers having to take out ever larger mortgages," said Brent Weimer, on of the report's authors.

The CMHC study draws attention to the fact that debt load varies greatly, depending on the city.

Of the 15 communities surveyed, Saint John, N.B., had the lowest debt ratio — just over 100 per cent. Whereas Vancouver was 242 per cent.

That compares with Hamilton at 176 per cent and the national average of 170 per cent.

"There is big variation from city to city," said Weimer. "This shows which cities will be the most vulnerable to an increase in interest rates. And the simple answer would be those that have the most debt."

Mortgages, he said, typically make up two-thirds of homeowner debt and that percentage can be somewhat higher in markets with excessively high housing costs.

Hamilton does not have house prices anywhere near that of Vancouver or Toronto, but the city has seen fantastic price jumps over the past decade.

A Re/Max study earlier this year found theaverage price of real estate in Hamilton-Burlington more than doubled in 10 years, from $274,798 in 2007 to $576,418 in 2017.

Those prices have dipped slightly more recently because of mortgage rule changes and rising interest rates pushing first-time buyers out of the market. Modest increases are forecasted for 2019.

Interestingly, high house prices are also having the effect of making properties in less expensive neighbourhoods in the east end and central parts of the city to be very hot. Whereas traditionally popular areas in the southwest and the Mountain with higher prices are simmering down, according to Anthony Passarelli, senior market analyst for CMHC.

As well, there is movement away from detached houses, with sales of new condo-apartments going through the roof.

New buyers have to meet stress tests about whether they can manage rate increases in the future. But what about people who are in the market already?

Weimer said the big problem will be when they have to renegotiate their mortgages.

"We've been in a declining interest rate environment for a couple of decades, with the exception of a couple of hiccups. Overall mortgage rates and interest rates seemed to be getting lower and lower and lower. And people have gotten used to when they are renewing their mortgage that the rate they renew at is lower than what the rate was," he said.

"But now all of sudden we've seen the Bank of Canada hike the bank rate a couple of times and fixed mortgage rates on the rise. There is definitely a signal coming from the Bank of Canada that more increases are probably expected for 2019."

The report says some households "may face challenges when rates rise. Highly indebted households have usually few debt consolidation options to respond to increasing debt service costs."

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