Posthaste: What the Bank of Canada hike will mean for mortgage borrowers

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If the Bank of Canada raises its rate by 50 bps, prime rates are expected to rise to 6.45 per cent. Read more

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Canada’s central bank has hiked its key rate six times since March from 0.25 per cent to 3.75 per cent, one of the most aggressive tightening cycles in recent memory.would be painful for some homeowners with variable-rate mortgages, which Bank research indicates now represent about a third of total outstanding mortgage debt, up from about one-fifth at the end of 2019.Article content

Ratehub sheds light on what the full year of rate hikes has meant to borrowers by calculating the payments of a homeowner who took out a $694,487 mortgage on a five-year variable rate of 0.90 per cent at the beginning of 2022.Article content Rising interest rates have significantly cooled the housing market and for the first time mortgage origination has dropped below pre-pandemic levels, says Equifax Canada’s third-quarterout this morning. The biggest drops were in Ontario and B.C. where new mortgages fell 23.6 per cent and 19.7 per cent respectively, from the third quarter of 2019.

 

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