The Vancouver Life Real Estate Podcast Mortgage Payments Up 71%
Another 50 basis point jump was on the table today as the BoC continued down the path of hiking rates at an unprecedented rate. For some context, variable rate mortgage holders were getting rates as low as 1.29% in January and on a $1mil mortgage, payments averaged about $3,350 a month. Fast forward to today’s rate hike and that same mortgage is now up over $5,700 or an increase of 71% in just 8 months. In even simpler terms, in January you could have expected to pay $40,000 a year for a home at prevailing rates - that same mortgage today going to cost $28,000 a year more or $68,000 - for those on fixed income, this is becoming harder and harder to manage.
The BoC also expects GDP growth to half from 3.25% down to 1.5% in a short period of time grinding economic activity to a stall before easing and allowing GDP to return to 2%. That’s their plan - whether that’s actually how it plays out remains to be seen. The BoC has made many projections over the last 2.5 years and none of them have really been accurate so take what they say with a grain of salt.
Given that inflation appears to be pervasive throughout the general economy with businesses still reporting a very tight labour market, inflation will likely stay elevated for some time as energy consumption throughout the winter time continues to rise. The cost of goods and services will likely stay elevated into the winter months as demand destruction is the name of the game. With that said, our guest Mychal Ferrera with BMO is reporting more pre-approvals for mortgages than he’s seen in a long time as more and more Buyers pile up on the sidelines waiting to strike - and with such limited inventory - it’s anyone’s guess as to when Vancouverites will begin to put their properties back on the market - however, it looks as though inventory will remain low for the foreseeable future as economic activity continues to slow down.
Contact Mychal Ferreira
https://www.linkedin.com/in/mychalferreira
https://www.instagram.com/mychalferreira/
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