Homeowners beware: mortgage and home equity line of credit payments have increased significantly in the past year in two of Canada’s biggest cities.
Calculations by Canada Mortgage and Housing Corporation (CMHC) based on Equifax numbers found these payments “increased at over two times the rate of inflation.” From Q3 2017 to Q3 2018, average mortgage payments shot up by more than 5 per cent, while HELOC payments rose by more than 15 per cent in both Toronto and Vancouver, Better Dwelling reports.
READ: Here’s How A Higher Inflation Rate Could Affect The Toronto Housing Market
These rising numbers can be pinned on inflation, as higher inflation rates can cause the Bank of Canada to hike up their interest rates. In December, Canada’s annual inflation rate rose from 1.7 to 2 per cent, according to a Statistics Canada report.
So how much are Toronto and Vancouver homeowners paying for their mortgage?
In Ontario’s capital, households paid an average of $1,710 in Q3 2018, which is an increase of 5.95 per cent from last year. Similarly, households in Vancouver paid an average of $1,734, which was up by 6.34 per cent from 2017.
READ: What You Need To Know About The Mortgage Stress Test In 2019
The numbers are significant compared to Montreal homeowners. In 2018, Montrealers paid an average of $1,081 for their mortgage, which was an increase of only 3.44 per cent year-over-year.
High mortgage rates can be off-putting for prospective homeowners, which is why New Democratic Party leader Jagmeet Singh recently announced that he wants to reintroduce 30-year amortizations. This could make housing more affordable upfront thanks to smaller payments, according to Mortgage Professionals Canada.
READ: Mortgage Professionals Canada Support 30-Year Amortization Period
But what about HELOC payments?
HELOC payments in Toronto and Vancouver have shot up considerably in the last year. Torontonians pay an average of $583, which is up by a whopping 19.47 per cent from 2017.
Vancouver’s payments haven’t increased as much year-over-year, but the growth is certainly noticeable and the payments are still higher than Toronto’s. The average Vancouver HELOC payment is $652, up 15.19 per cent.
READ: How HELOCs And Record Debt Are Threatening A Financial Crisis
Surprisingly, Montreal’s HELOC payments climbed the highest in comparison and rose by 20.57 per cent. In Q3 2018, Quebecers paid an average of $680.
