Mortgage interest costs rose 23.9% in the country in February, the biggest increase in four decades.
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“There is no respite in housing either, the rise in mortgage costs is accelerating,” says Hélène Bégin, Senior Economist at Desjardins Group: 21.2% in January; 23.9% in February: The cost of mortgage interest continues to rise, hitting its highest increase since July 1982 last month.
delay effect
In fact, this mortgage inflation is the lagged effect of rate hikes initiated by the Central Bank of Canada in early 2022.
“As time goes by, more and more people are extending their mortgage rates,” explains Ms. Bégin.
As rate hikes appear to be leveling off, the average mortgage cost continues to rise as more people pay higher mortgage rates.
Remember, when the pandemic started, you could borrow at effective mortgage rates of around 2% to 2.5% over a 5-year period. Today, the rates offered are around 5.5% to 6.5%.
Ms Bégin estimates that we will have to wait until the end of this year or even 2024 to see interest rates fall. It will take even longer for rates to drop to more regular levels.
And because the majority of Quebecers got their last mortgage cheap, everyone pays more the next time they renew.
“Nobody will escape that,” concludes the economist.
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