Fifty per cent of these variable-rate mortgage holders have already reached their trigger rate, according to estimates from a new Bank of Canada research paper published Tuesday. That share will rise to 65 per cent by the middle of next year as the central bank continues to hike interest rates to rein in inflation.“The bottom line is that mortgage costs for some Canadians have already increased, and they will likely increase for others in time, making home ownership more expensive.” Ms.
Moreover, the central bank is “not expecting a severe economic downturn with the kind of large job losses typical of past recessions,” she said. “But with the rapid increases in the policy interest rate by the Bank of Canada since March, 2022, variable-rate mortgage borrowers have faced historically large interest rate increases that make reaching their trigger rate a significant possibility,” said the paper authored by Stephen Murchison, Advisor to the Governor, and economist Maria teNyenhuis.
Outstanding mortgages include fixed-rate mortgages for which the monthly payment and interest cost remain the same for the term of the loan. It also includes variable-rate mortgages with variable payments for which the monthly amount changes with fluctuations in the central bank’s benchmark interest rate.
Oh I amshocked that all these peeps ramped up their mortgages in hopes house prices would keep ramping up. Please look back to 1979-1982. Yup. It’s a lesson you young folks may have leaned from Grandparents or parents. Oops. Forgot to listen
By the numbers, it looks like the mortgage lenders knew what was coming and steered new customers toward variable rate mortgages, starting even before the arrival of Covid! Do I smell a rat?
🤦🏻
Uhoh… conditioning for another crisis
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