The Bank of Canada’s recent interest rate hike, the seventh this year, is set to impact mortgage payments across the country. With the prime rate increasing, homeowners can expect higher variable mortgage rates. This blog breaks down the potential effects of monthly payments for homes at different price points, providing insights into the challenges Canadian homeowners may face in the coming months.
Key Takeaways:
- Rate Increase Overview:
- The Bank of Canada’s latest rate hike aims to control inflation and cool housing prices.
- Prime rates at major banks will rise from 5.95% to 6.45%, affecting variable-rate mortgages.
- Impact on Monthly Payments:
- For an average Canadian home priced at $644,643, a variable rate increase from 4.95% to 5.45% results in a $162 monthly payment increase.
- In Metro Vancouver, with a benchmark home at $1,148,900, monthly payments could rise by $264.
- Regional Breakdown:
- Calgary, with a benchmark home at $523,900, might see an increase of $132 per month.
- Edmonton, with a benchmark home at $378,900, could experience a $95 monthly payment hike.
- Future Rate Hike Expectations:
- Mortgage professionals anticipate further rate hikes in 2023, albeit more measured.
- Labor market tightness and persistent inflation remain key factors influencing future rate decisions.
Understanding the potential impact of these rate increases is crucial for homeowners navigating uncertain financial and job security. As interest rates continue to evolve, staying informed is vital for making informed decisions in the Canadian real estate market.
Please contact Jared Gibbons, your local realtor, should you have any questions.