The cost of mortgage interest jumped 23.9% in February in the country, the largest increase in four decades.
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“There is no respite for 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 is continuously rising and last month reached its highest growth since July 1982.
This mortgage inflation is in fact the delayed effect of the increases in the key interest rate initiated by the Central Bank of Canada at the beginning of 2022.
“The more time goes by, the more people renew their mortgage rate,” explains Ms. Bégin.
As interest rate increases appear to be winding down, the average mortgage cost continues to rise as more people have to pay higher mortgage rates.
Remember that at the start of the pandemic, you could borrow at effective mortgage rates of around 2% to 2.5% for a period of 5 years. Today, the rates offered are around 5.5% to 6.5%.
To start seeing a drop in interest rates, it will be necessary to wait until the end of this year or even 2024, estimates Mme Begin. It will take even longer for rates to come down to more regular levels.
And since the majority of Quebecers took out their last mortgage at particularly low rates, everyone will pay more at the next renewal.
“No one will escape it,” concludes the economist.