Global News ~ April 12th, 2023
The Bank of Canada is warning that higher mortgage rates tied to its rapid policy rate hikes over the past year will test some Canadian households’ finances in the months to come.
The central bank’s latest projections about the impact of higher borrowing costs on Canadians come the same day it held its benchmark interest rate at 4.5 per cent.
Wednesday’s rate is 4.25 percentage points higher than the rock-bottom lows seen through most of the pandemic, when many Canadians took advantage of cheaper mortgage rates to jump into the housing market.
That’s driven monthly costs higher for homeowners on some variable-rate mortgages and for those renewing fixed-rate terms.
For example, an estimate earlier this year from comparator site Ratehub.ca showed that the average Canadian homeowner who took out a variable rate mortgage to buy a home in January 2022 would be paying roughly $1,500 more per month on the same loan after the last Bank of Canada rate hike.
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