Property owners in Summerland, B.C., were recently hit with news that local taxes are expected to rise by 6.36% in 2024. While the mayor highlighted that this rate remains below average for nearby communities, it still adds to growing affordability pressures across Canadian households. For homeowners juggling mortgages, utility bills, and inflation, a municipal tax increase—even a modest one—can be another tough pill to swallow.
This announcement should prompt Canadian homeowners to take a closer look at how local tax hikes—not just interest rates—can affect their long-term housing costs. At Unrate.ca, we’re always watching the financial ripple effects of policies that hit the household bottom line. Here’s what you need to know and how it might impact your mortgage journey this year.
New Property Taxes and Their Domino Effect
When cities like Summerland increase local taxes, they often point to inflation, maintenance of aging infrastructure, or staffing costs. While some of these are unavoidable, the effect on homeowners—particularly those with variable-rate mortgages—is real and immediate.
Let’s put things in perspective. A 6.36% municipal tax hike on a property assessed at $800,000 could mean an extra $250 to $300 annually, not including other potential service fee bumps. While that may seem minor, it’s yet another added cost layered on a financial landscape already fraught with higher mortgage payments and expensive groceries.
For many families who bought homes during the pandemic housing surge—when mortgage rates were at record lows—these additional costs weren’t baked into the budget. But now they should be, especially as renewal time creeps closer and today’s fixed-rate mortgages sit well above the 5% mark.
Mounting Costs in a Post-Pandemic Canada
Municipal tax increases aren’t new, but they are becoming more frequent and sizable. According to a 2023 report by the Canadian Federation of Independent Business, 83% of municipalities in Canada proposed operating budget increases above inflation levels. That trend is expected to continue in 2024.
Now layer in national housing data. Per the Canadian Real Estate Association (CREA), the average home price in Canada was $716,000 as of March 2024. Monthly payments for new buyers putting 20% down with a 5.5% fixed rate over 25 years total over $3,400. Add in municipal taxes, rising utility fees and insurance premiums… and the cost of carrying a home becomes a financial tightrope.
If you’re currently holding a variable rate mortgage, you’ve already felt the pain of rising rates this past year. Toss in local tax hikes and your cushion thins even more. We often advise homeowners to prepare for these budget shockwaves—not just from Ottawa or the Bank of Canada, but from your very own city hall.
Budgeting Ahead with Mortgage Strategy
There’s no magic wand to avoid local tax increases, but there are ways to manage the strain. The first is running the numbers. At minimum, homeowners should be factoring in at least a 5–7% annual increase in their tax budget, especially in smaller communities needing to invest in infrastructure and services.
Using tools like our mortgage calculator is a great start. But there’s more to consider. If your mortgage is up for renewal, this year might be the time to look into refinancing at a longer term to lock in predictability. If you’re short on equity or need flexibility, a HELOC might offer temporary breathing room—though it’s not a permanent fix.
For our clients nearing retirement age in places like Summerland, we’re also seeing an increase in interest around reverse mortgages. With home values still relatively stable in many parts of BC, tapping into that equity could offset rising costs while avoiding monthly payments altogether. It’s not for everyone, but when used strategically, it turns tax hikes from a threat into a manageable line item.
Resilience in a Changing Housing Landscape
Summerland may be just one municipality, but the message is clear for all homeowners: Every level of government—from the Bank of Canada to your local council—impacts your true cost of living. And when multiple levels push costs higher simultaneously, your mortgage affordability can shift quickly.
According to the Bank of Canada’s most recent Monetary Policy Report, growth is expected to remain modest in 2024 with inflation edging closer to the 2% target by 2025. But central bank optimism won’t mean much if local communities continue to rely on the homeowner tax base to plug budget holes.
Now more than ever, homeowners need a proactive plan. Understanding your total housing cost—including taxes—is just as critical as locking in the best mortgage rate. Set reminders for council meetings. Sign up for pre-renewal alerts. And engage with a broker who watches all angles, not just the ones from Ottawa.
Conclusion: Every Dollar Counts in 2024
Municipal tax increases may seem minor in isolation, but they add up—especially alongside today’s elevated mortgage rates and living expenses. Even a single percentage point change can create an unplanned $500 year-over-year expense for the average Canadian household. In cities like Summerland, that can impact savings, renovations, or even mortgage eligibility.
At Unrate, we help homeowners stay one step ahead. Whether you’re looking to refinance, buy your next property, or simply understand how rising local costs will affect your future, our advisors are here to translate rate sheets and tax decisions into real options.
If you’re feeling the squeeze already, now’s the right time to talk to us. Saving money on your mortgage could help balance out what city hall can’t control.
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