Certain mortgages saw interest grow by 250% in just a year

The latest report by Ratehub says a homebuyer in 2022 would pay about 250% in interest during the first year of the mortgage compared to the amount a buyer would pay last year.

In October 2021, the amount paid in interest during the first year of the mortgage would be around $12,310, if it’s a five-year mortgage for $600,000 with a fixed rate of 2.09% and a 25 years amortization period.

Meanwhile, in October 2022 a homebuyer would pay $30,819 in interest during the first year with the same five-year mortgage for $600,000 and an amortization period of 25 years, but with a 5.24% fixed rate.

Ratehub used the best five-year fixed mortgage rate available to homebuyers for this calculation. In addition to it, the analysis was also based on an uninsurable rate (with a larger than 20% downpayment), which means the buyers would get these rates or better.

Although there is data saying the annual change in mortgage interest costs was about 10-20% during the previous year, both fixed and variable rates have more than doubled over that period of time.

The Canadian Real Estate Association’s report shows that the average home price across Canada was $644,643 last month, marking a 9.9% decrease from a year ago.

According to Canada Mortgage and Housing Corporation, the average standard mortgage interest rate for a five-year loan was 5.75% in October.