Rising interest rates tend not to be welcome news to most people, especially not to Canadians who have borrowed heavily in order to buy a home in the country’s red-hot real estate markets over the past few years.
The latest rate increase is expected to come Wednesday and the central bank is expected to hike its key lending rate by as much as 75 basis points in order to combat runaway inflation.
There is a good reason why that might sound scary to many people, especially those who have recently purchased a home on a variable rate mortgage.
According to a report released this week by the Canada Mortgage and Housing Corporation (CMHC), more than half of all mortgages taken out in the second half of 2021 were variable rate mortgages, an anomaly not seen in the last 10 years in a country where people tend to strongly favour fixed rates.
Driven by steep…
