Are you one of the millions of Canadians who will need to renew their mortgage in the next two years? If so, our calculator may interest you.
Canada saw its largest interest rate rise since the 1990s.
While they have been historically low during the pandemic, the gradual increase in the key interest rate from 2022 has had the effect of raising them, thus increasing the amounts to be paid to both potential buyers and current owners.
According to the Canada Mortgage and Housing Corporation (CMHC), approximately 2.2 million mortgages will need to be renewed over the next two years, or nearly half of all mortgages currently in effect in Canada.
Most of these loans were obtained at favorable pandemic interest rates. Once renewed, average payments can increase by 30% to 40%.
Enter two interest rates to compare how much extra you might have to pay depending on the frequency of your payments. Also see how different rates can affect the total amount you pay – and principal – over the life of your mortgage.
Main rate effect
The Bank of Canada has increased its key interest rate 10 times since 2022. It rose from 0.25% during the pandemic to a peak — not seen since 2014 — of 5% at the end of 2023. Its increase is aimed at slowing inflation and the economy. This is a result of rising interest rates.
Evolution of key interest rates and inflation
source : Bank of Canada and Statistics Canada
Economists expect the central bank to keep interest rates high. However, no further increases will be on the radar. The main rate should decrease gradually starting in spring or summer.
Even if this has the effect of lowering interest rates, they should not return to useful levels such as those observed during the pandemic, according to experts, or even those before 2020.
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