A new report from RATESDOTCA found that Canadians who took a five-year insured $500,000 variable-rate mortgage in the low-interest days of 2021 would be paying $23,579 more in cumulative interests by September 2023 compared to a fixed-rate mortgage option. See Variable rate mortgage holders on the hook for thousands in interest:
The figure represents 63 per cent in added interest compared to fixed rates, while mortgage payments in this scenario climbed nearly $1,000 per month.
Fixed-rate mortgages had been the norm in Canada for years, but as of July 2022, variable-rate mortgages represented 57 per cent of total mortgage quotes in Canada, according to RATESDOTCA.
The rate shock impact is discussed further in the segments below.
James Laird, co-founder and co-CEO of Ratehub.ca, joins BNN Bloomberg to discuss the company’s recent research on the disparities between home prices in Canada and the incomes required to buy a home. Here is a direct video link.
The discussion below covers similar impacts in America, where mortgage rates (30-year fixed) are nearing 8% and new auto loans a record 10%. Meanwhile, delinquencies on the lowest quality “subprime’ auto loans are already higher than during the 2008 financial crisis.
Ted Rossman, Bankrate senior industry analyst, joins ‘The Exchange’ to discuss the rising cost of mortgages, high mortgages cutting homebuyers’ purchasing power, and risks involved in homebuyers’ betting on refinancing. Here’s a direct video link.
;
