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Home Affordability

New Year, Same Rate Hikes: The 8th Increase in 10 Months

Patti Cosgarea by Patti Cosgarea
January 25, 2023
in Affordability, Bank of Canada, Canada
3 min read
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The new year brought with it new optimism that maybe, something will finally give to make Canadian real estate more affordable. The Consumer Price Index for December 2022 was released earlier in January and at 6.3%, it indicates that inflation is slowing. However, the Bank of Canada announced today that it still needed to increase the key rate by 25 basis points, marking the 8th increase in 10 months. 

  • Related Read: 10 Common Misconceptions About Mortgage Renewal

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Inflation is Finally Moving in the Right Direction 

Although another rate increase is bad news for homeowners with variable mortgages, lines of credit, or those shopping for a mortgage, inflation is easing which should have a positive effect on our exhausted real estate market. James Laird, Co-CEO of Ratehub.ca and President of CanWise mortgage lender, explains, “Limited rate increases or possibly fixed rate decreases will provide support for home values at their current levels. As mortgage rates stabilize, home values should too.”

  • Related Read: Considering Selling? These are the Ontario Markets Where Properties are Moving the Fastest

The next rate announcement from the Bank of Canada is expected in March, and experts are optimistic: “If inflation continues to move in the right direction, consumers should look to March for the first rate hold since January 2022,” said Laird. Take a look at the chart below to see how inflation has changed as interest rates have grown in 2022.

Another Rate Increase, Another Change to Variable Mortgage Payments

Ratehub.ca explained that a homeowner who secured a property for $628,318 (the December 2022 average price in Canada, according to the Canadian Real Estate Association), and made a 10% down payment with a 5-year variable rate of 5.30% amortized over 25 years would have a monthly mortgage payment of $3,480. 

Following today’s rate increase, the variable mortgage rate will increase to 5.55% and the monthly payment will increase by $84 per month and $1,008 per year, for a new monthly payment of $3,564. 

  • Related Read: The Crushing Impact of BoC’s Interest Rate Hikes on Canada’s Housing in 2022: Infographic

We’re here to help! If you’re unsure if you should hold, sell, or buy, let’s talk! We have real estate agents across the country who can help you navigate the changing markets and plan for your next step. Download our free Buyer’s or Seller’s Guides and give us a call today to discuss. Keep an eye on our Market Insights blog page for more information and tips about mortgages and sign up for our newsletter to get all the details right to your inbox.

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Patti Cosgarea

Patti Cosgarea

Patti is Zoocasa's Public Relations and Content Marketing Manager. Passionate about marketing and digital communication, she creates content to support Canadians throughout their real estate journey. Outside of Zoocasa, Patti can be found renovating her townhouse in Kitchener and exploring Waterloo region by foot or paddle.

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Zoocasa © 2007–2022. The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA.