In light of the interest rate increase by the Bank of Canada yesterday, there are huge financial implications to homeowners. It isn't the tiny 0.25% increase in and of itself that is problematic, it's the fact that it's on top of a very steep escalation in rates over the past year or so. Each rate increase has meant more interest will form the portion of mortgage payments.
This past year was a hard lesson for many people who speculated that interest rates would never rise from the ultra low levels of recent years. This recency bias blinded many home buyers and newer homeowners to the longer term averages for interest rates and mortgage rates, by extension.
In my opinion, I'd be surprised if we revisit the ultra low rates we saw during the COVID-19 pandemic. Instead, I think homeowners with mortgages and prospective buyers have to get used to this new era of more historically "normal" interest rate levels.
See the video below for more when it comes to "What mortgage owners need to know about the Bank of Canada's rate hike" from BNN.
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