Homeowners in Canada could face a 21% jump in mortgage prices: report

Oct 13 2022, 9:48 pm

Are you nervous about renewing your mortgage? If you are, you’re not alone, according toĀ Ratehub.ca.

The mortgage brokerage says many Canadians are concerned about rising interest rates.Ā 

According to Ratehub.ca, a homeowner will pay $445 more per month or $5,340 per year on their mortgage payments, equating to a 21% increase.

The best five-year fixed mortgage rate today is a 4.89% renewal.Ā 

So if homeowners renew this November, they would have a mortgage balance of $394,170 and a new monthly mortgage payment of $2,567.

According to Ratehub’sĀ mortgage payment calculator, back in November of 2017 “a homeowner who put a 10% down payment on a $500,000* home with a 5-year fixed rate of 2.69% (the best rate they could receive five years ago) amortized over 25 years (total mortgage amount of $463,950) would have had a monthly mortgage payment of $2,122.”

“It is important to note that anyone who got a mortgage five years ago would have passed the stress test rate of 4.99 per cent, which means making the payment should still be possible, but could be painful,” added James Laird, co-CEO of Ratehub.ca and president of CanWise mortgage lender.

Laird warns households with fixed rates up for renewal in the next few months will see their monthly mortgage payment jump substantially.

“In order to make their higher mortgage payments, households will have to cut back in other areas. The hope is that the income within the household has gone up over the last five years, such that they can absorb the higher mortgage payment. At a minimum, as long as the income profile is similar to what it was five years ago, the household should be able to manage the higher payment.”

Laird advises homeowners to shop for their renewal rate and possibly switch to a new lender that can offer the lowest rate.

However, he adds, “Anyone with a renewal in the next 120 days is eligible to hold today’s fixed rates.”

Nikitha MartinsNikitha Martins

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