Can You Afford a Mortgage Rate Hike?

(March 28, 2012 )

A BMO Bank of Montreal survey found that in Vancouver, only 48% said they could still afford their home if rates went up by 2%.  What about you?

John Andrew, real estate professor at Queen’s University commented, “It’s alarming because we’re only talking about a 2% increase here, and it shows how borrowers have become acclimatized to low interest rates."

In Vancouver, new mortgages average from $500,000 to $600,000.  To give you an idea of what a 2% increase means:

2.99% mortgage rate for $500,000 over 25 years = $2,364
4.99% mortgage rate for $500,000 over 25 years = $2,905.

Interest rates are expected to increase beginning next year, but the increase is expected to be a gradual slow climb. 

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