While Wednesday’s interest rate hike was predictable, it will be a severe blow to Mr. and Mrs. An economist analyzes everyone who has to put their hands in their pockets to pay off their mortgage.
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The Bank of Canada has raised its key interest rate, which is now at 5%, a rate not seen since 2001, and which will have a significant impact on Canadian wallets.
“The first to be affected are people who have taken out variable rate mortgages,” explained Alexandre Bélanger, district manager for mobile mortgage specialists at TD.
The Canadians who will suffer the most from the rate hike will primarily be those who bought properties during the housing market peak in early 2022, the economist believes.
Here’s a look at the rate hike on mortgage payments for a $500,000 loan as calculated by Mr. Bélanger:
However, hope of finding cheaper interest rates is not yet lost as economists expect the Bank of Canada to take a pause in the coming months, according to the mortgage specialist.
“An economic slowdown is also expected towards the end of the year and the beginning of 2024, potentially leading to a gradual rate cut in 2024,” he stressed.