Mortgage costs showed a record hike in October

The latest report by Statistics Canada says mortgage interest costs showed the largest increase in almost 30 years last month.

In October, the mortgage interest costs were up by 11.4 % annually – last time Canada saw a larger hike was in February 1991 when the number rose by 11.7%.

Moreover, property taxes also went up by 3.6% on a year-over-year basis, while a year earlier, the increase was 1.5%.

According to Statistics Canada, the overall consumer price index rose by 6.9% last month from a year ago, meeting the economists’ expectations. Core inflation, excluding volatile food and energy prices, went up by 5.3% annually, following a 5.4% increase seen in September.

Although Canada’s inflation remained steady, the government organization noted that the acceleration of mortgage interest costs and higher gas prices were “restrained by slowing price growth for food.” Food prices rose by 10.1% in October, which is slightly lower than 10.3% reported in September.

“Housing-related inflation seems to be quite stable right now,” – Avery Shenfeld, chief economist at CIBC Capital Markets, said.

“Mortgage interest payments are showing a faster acceleration, rising at a more than 11% pace as borrowers renew their loans at higher rates.”

The inflation numbers, following a stronger-than-expected jobs report, keep showing that the national economy is in overheated position. According to the central bank Governor Tiff Macklem, rates will need to keep rising, although he admitted the end of this rate-hike cycle is near.

Now, traders are predicting at least a 0.25% rate increase on December 7, with a 50% chance of a 0.50% hike. The BoC has already raised borrowing costs by 3.5% since March, leading the overnight lending rate to 3.75%.