Most mortgage borrowers to see payments rise 34% to 54% vs. early 2022: Bank of Canada + MORE Dec 22nd

Several of Canada’s big banks and numerous other lenders are offering a practical gift for borrowers this holiday season: lower mortgage rates.

As Canadians are painfully aware, Canada’s inflation has stubbornly persisted above the Bank of Canada’s (BoC) target rate of 2%. In response, the BoC has repeatedly raised the benchmark interest rate—which sets the pace for banks’ prime rates—since early 2022. While no one can predict with certainty where interest rates are going, the BoC seems in no hurry to reduce rates just yet, having kept the benchmark rate stable at 5% since July 2023.

As a result of these rate hikes, the interest rates available on guaranteed investment certificates (GICs) have risen as well—leading to renewed interest from savers and investors. In fact, over the past 12 months, the average one-year Canadian GIC rate has shot up from 2% to 4.90%. As a result of this move-up in rates, even market-linked GICs—which offer a lower guaranteed interest rate because of higher potential gains linked to the stock market—are offering a minimum guaranteed rate over 2%, as of mid-December 2023.

How high will GIC interest rates go?

The interest rates you pay on various types of debt, like a mortgage or a line of credit, depends mainly on the benchmark rate set by the BoC…

HSBC sale to RBC ‘a sad day for Canadian mortgage consumers,’ expert says  CBC NewsRBC-HSBC deal approval – Video – BNN  BNN BloombergOttawa approves RBC’s $13.5-billion takeover of HSBC Canada  The Globe and MailFeds approve RBC’s purchase of HSBC Canada  iPolitics.caRBC will benefit from HSBC deal amid competition concerns: portfolio manager  BNN Bloomberg

RBC’s $13.5-billion acquisition of HSBC’s Canadian unit cleared its final hurdle after receiving approval from Chrystia Freeland, Deputy Prime Minister and Minister of Finance.

If you had a mortgage as of February 2022, chances are you will be facing a payment increase before the end of 2025.