ICYMI: Canadians flocked to variable-rate mortgages ahead of Bank of Canada rate hikes, CMHC report shows — via financialpost RealEstate Mortgages
The discount on variable rate mortgages reached 118.5 per cent in early 2022, as variables made up 55 per cent of the share of mortgages in that period.
By comparison, in 2020 variables were trading at a 89.5 per cent premium and made up only 7.4 per cent of the new mortgage share. The Bank of Canada hiked its benchmark policy rate by 25 basis points in March, followed by two consecutive 50 bps hikes in April and June to bring the rate to 1.5 per cent.Article contentthat Canadians who recently bought with variable-rate mortgages could see monthly payments jump significantly on renewal.
“These households will see the largest rate increase because they took out a mortgage when rates were at or near record lows. This is particularly true of the historically large number of households that opted for variable-rate mortgages,” it said. The CMHC report also found that residential mortgage debt continued to ramp up in 2021, rising nine per cent compared to the previous year, as a result of strong activity in the housing market and record-low interest rates.
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