My Opinion: Massive Wealth Run offs from China is Making local Canadian Taxpayers Homeless And poor. Canada is Now .
New buyers can expect home ownership to become even less affordable next year as mortgage costs rise, while current owners will be largely insulated from higher rates.
That’s one of the main takeaways of a new outlook from Scotiabank, which forecasts mortgage carrying costs to increase by about eight per cent next year because of rate increases and tougher mortgage rules.
That’s almost three times more than the 2.5 per cent the bank expects household incomes to rise.
More expensive mortgages coupled with less income to pay for them is a bad combination for new buyers, which is why the bank sees affordability getting further out of reach next year.
The same can’t be said, however, for those who’ve already bought, since most of them are largely insulated from rising interest rates.
About a third of all Canadian households fall in the latter camp, and their standard, five-year fixed-rate mortgage should offer them some protection now that the Bank of Canada seems to have entered into a rate-raising cycle.
“As a result, rising borrowing costs feed through only gradually to mortgage holders,” the bank said. In fact, the majority of borrowers who are set to renew their mortgage in the next little while will likely do so at a rate comparable to, or even lower than, the one they originally signed up for.