(Lisa Schick/980 CJME file photo)

By Derek Craddock

INTEREST RATES

Interest rate hikes leading to even higher mortgage payments for local homeowners

Jun 8, 2023 | 4:00 PM

Interest rates are up again which only spells bad news for local mortgage holders.

The Bank of Canada announced a rate hike to 4.75 per cent on Wednesday, the highest it’s been in more than 20 years.

That increase will affect many people’s ability to borrow money, whether it’s through loans, lines of credit or mortgages.

Maria Titarenko is a mortgage broker based in Prince Albert who said those with variable-rate mortgages are feeling the pinch again.

She added that each mortgage is different but said she’s heard some local homeowners are paying anywhere from $300 to $1,500 more on their mortgage payments.

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Meanwhile, James Laird, co-chief executive of Ratehub.ca estimates that a homeowner who had a 10 per cent down payment on a $716,083 home with a five-year variable rate of 5.55 per cent over 25 years has a monthly mortgage payment of $4,075.

With the Bank of Canada’s 25-basis point rate increase, the homeowner’s variable mortgage rate will increase to 5.80 per cent and their monthly payment will increase to $4,173. This means that the homeowner will pay $98 more per month or $1,176 per year on their mortgage payments.

As for fixed-rate mortgages, Laird added that they have started to increase in anticipation of a possible rate hike and will increase further now that the bank has hiked rates. This will greatly affect those looking for a new, fixed-rate mortgage or those who are coming up on renewal.

According to RateHub, to purchase a home in Prince Albert at the current median price of just over $200,000 requires a down payment of around $13,000. The best options for variable-rate mortgages range from $1,221 to $1,250.

That number skyrockets for those purchasing more expensive homes in the city. A variable rate mortgage for a home valued at $700,000 could cost the buyer monthly payments of over $4,300.

While homeowners are hoping for some relief in the future, Titarenko believes that won’t be coming anytime soon.

“As long as the housing market remains strong and inflation is above two per cent, there is a potential that the Bank of Canada could raise the prime rate even more.”

According to the Saskatchewan Realtors Association, May saw over 1,700 home sales, a four per cent decline year-over-year but 20 per cent above the long-term, 10-year average.

“Saskatchewan continues to benefit from a strong economy which is helping offset some of the impacts of higher lending rates, keeping sales activity above levels seen before the pandemic,” said Association CEO Chris Guérette. “Despite ongoing inventory challenges, our market is once again showing its resilience as sales remain above long-term averages.”

The SRA said that Saskatchewan’s benchmark price reached $329,600 in May, nearly two per cent higher than the month prior.

Meanwhile, the Canadian Real Estate Association said sales jumped by 11.3 per cent between March and April as the real estate market picked up again, but supply remained at a 20-year-low.

–With files from The Canadian Press

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derek.craddock@pattisonmedia.com

Twitter: @princealbertnow