Here’s how variable mortgage payments have changed in K-W in 2022

Homeowners with variable mortgage rates have seen their monthly premiums increasing, and with the latest interest rate hike by the Bank of Canada, monthly mortgage payemnts will continue to rise.

On Wednesday, the Bank of Canada hiked its key policy rate by half a percentage point to 4.25 per cent– the last expected rate hike of 2022 – and a total increase of four per cent over the year.

Mortgage calculations given to CTV News Kitchener from RateHub.ca show a homeowner who put a 10 per cent down payment on a $723,200 home with a 5-year variable rate of 4.75 per cent amortized over 25 years has a monthly mortgage payment of $3,808.

The newest rate hike pushed the rate to 5.25 per cent, and increases the monthly payment by $191 since the last rate hike in October.

CHANGE OVER THE YEAR

In January of 2022, a homeowner who put a 10 per cent down payment on a $924,600 home in Kitchener-Waterloo with a 5-year variable rate of 0.90 per cent would have had a mortgage payment of $3,194 with a mortgage of $857,963.

“Wednesday’s 50-basis point rate increase the homeowner’s variable mortgage rate will increase to 4.90% and their monthly payment will increase to $4,941,” RateHub.ca said.

This means the homeowner would now be paying $1,747 more per month or $20,964 more per year on their mortgage payments, representing a 55 per cent increase.

Based on the October 2022 CREA average home price in Kitchener-Waterloo, Wednesday’s rate hike means homeowners will pay $191 more per month or $2,292 per year on their mortgage payments.

In January of 2022, a homeowner who put a 10 per cent down payment on a $924,600 home with a 5-year fixed rate of 2.39 per cent – the lowest insured 5-year fixed rate in Canada at the start of January 2022 - the amortized over 25 years would have a monthly mortgage payment of $3,796.

This is assuming the same mortgage of $857,963.

EXPERT WEIGHS IN

Mortgage advisor James Laird said the latest rate hike does have a silver lining, as the Bank of Canada will now be considering if rates need to go up further, instead of saying “rates will need to go up further.”

“The one thing I like to point out in these discussions is that everyone with a mortgage today did pass a stress test today at a rate pretty close to what they have right now,” said Laird. “So, that is the one kind of p[positive thing, is these mortgages were all underwritten to make sure the consumers could qualify for rates similar to those we are seeing in the market.

Laird said for those who have seen their mortgage rates increase, some options to help pay down the balance could mean forgoing frivolities such as eating out or vacationing, while paying down lump sum payments if possible.

“Make a lump sum payment or an additional payment. That’s obviously helpful because it goes directly to your principal. But, I also feel silly saying that as I know Canadians are strained right now, and not a lot of people have extra money just sitting around looking for someplace to go,” said Laird.

He said the one thing not to do is miss a payment, and if that may occur, the best option is to reach out to the lender and look for options.

This may include extending the amortization to lower the monthly mortgage payment, however, it does extend the life of the load.

“The lenders are being pretty accommodating right now. What’s offered to each consumer is based on the situation … they listen to what’s going on,” said Laird.