Canadian Mortgages Forecast To Rise Before HikesEven if the Bank of Canada (BoC) holds the overnight policy rate until Fall, mortgages will creep higher. Desjardins sees the 5-year fixed-rate hitting 3% by Fall of next year. This would be an increase of almost 50% from the end of last year. At that number, the 5-year fixed mortgage rate would be around pre-pandemic levels. It would be a gradual tightening of the market, without the influence of the overnight rate.
Found a way to circumvent the stress test? This would have a fairly significant impact on the debt one can carry. Increasing the mortgage rate from 2% to 3% reduces maximum mortgage leverage by nearly 10%. As for existing homeowners, they would obviously experience no impact until renewal. Those subject to the stress test are unlikely to see a difference in their leverage. Unless rising rates push the stress test rate higher.
A large Canadian financial institution sees higher mortgage rates in your future. Desjardins’ mortgage forecast shows they expect mortgages to continue to climb from here. They see 5-year fixed mortgage rates hitting pre-pandemic levels by next fall. That is before the first expected hike to the...
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