Homeowners
Homeowners with outstanding mortgage debt are likely to see their monthly payments rise — but only by a little.
Rob McLister, the founder of RateSpy.com, says that if the big banks boost their prime rates by a quarter of a point, the typical variable-rate borrower will see their monthly payment go up by about $24. That’s based on an average mortgage of around $201,000, with an average rate of roughly 2.15 per cent, an average contracted amortization period of 22.4 years and a remaining amortization of somewhere between 14 to 19 years.
“One or two rate hikes alone won’t derail the housing train or economy. Nor will it cause a material uptick in defaults or real estate listings,” McLister says.
“Three or more hikes is a different story. Rates that are 75-100+ basis points higher would cause a perceptible drag on sales and add another load to peoples’ already heavy debt burden.”