Interest On Some Canadian Mortgages Is Up 250% Year-Over-Year

The interest on some mortgages in Canada has risen 250% over the past 12 months, according to an analysis by Ratehub.ca.

The data from Ratehub.ca, a mortgage comparison website, found that a Canadian homebuyer in 2022 could be paying 250% more in interest payments during the first year of their mortgage compared to 2021.

In October of last year, a homebuyer would have paid $12,310 in interest during the first year of a $600,000 mortgage with a five-year fixed interest rate of 2.09% and an amortization period of 25 years.

This past October (2022) a homeowner with the exact same mortgage would pay $30,819 in interest during the first year they owned the property. The scenario from Ratehub.ca assumes a $600,000 mortgage with an amortization period of 25 years. But now, the fixed five-year interest rate is 5.24%.

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The calculations are based on the best fixed five-year mortgage interest rates available to Canadian homebuyers.

According to the Canadian Real Estate Association (CREA), the average home price in Canada was $644,643 in October 2022, representing a 9.9% decline from the same month of 2021.

The average mortgage interest rate in Canada for a five-year term was 5.75% in October of this year, according to the Canada Mortgage and Housing Corporation (CMHC).