The Financial Post reports in its Wednesday edition that mortgage interest rates spiked in 2022, in some cases tripling from the lows of 2021. The Post's Jason Heath writes that five-year fixed and variable rates were in the 1.5-per-cent range or less last year and are now over 5 per cent at the Big Six banks. Borrowers with variable-rate mortgages have in many cases already been contacted by their lender to increase their mortgage payments.
The Bank of Canada estimates that 50 per cent of variable mortgages -- or a staggering 13 per cent of all mortgages in Canada -- hit their trigger rates after they increased rates by 50 basis points in October. Variable rates have risen by 3.5 percentage points since March and are expected to rise another 25 to 50 basis points at the BOC's December interest rate announcement. The BOC estimates payments for borrowers who took out variable-rate mortgages in 2021 had risen by 20 per cent on average by the end of October.
For younger people who managed to get into the housing market in recent years, the rise in rates is a particularly bitter pill. They are less likely to have extra savings kicking around to make a lump-sum payment against their variable-rate mortgage.
© 2023 Canjex Publishing Ltd. All rights reserved.