Quebecers on the verge of buying a $500,000 bungalow could have to pay almost $150 more per month to absorb the mortgage increases that are coming, warns a real estate broker.
• Read also: Further increases to be expected, warns the Bank of Canada
“You could buy a $500,000 house, with a $50,000 down payment, at a five-year fixed rate of 3.59% at $2,268 per month, but you can expect that rate jump soon to 4.2%, which would cost a good $148 more per month,” said Anna Estephan, independent broker, in Candiac.
However, according to Anna Estephan, who was a mortgage broker in a large bank before embarking on real estate, new financial pressure could soon hurt first-time buyers.
“People who buy properties between $200,000 and $500,000, with a family income between $50,000 and $80,000, will be the first affected,” analyzes the experienced real estate broker.
“With the increases in real estate prices and the rate hikes, it will become almost impossible for them,” she goes so far as to say.
- Listen to Yves Daoust, director of the Money section of the Journal de Montréal and the Journal de Québec, on QUB radio:
$25 more per $100,000
For Luigi Iafrancesco, mortgage loan adviser at the National Bank, the effect should be felt in a month, so the increase in the key rate announced yesterday will not be felt on the next payment, but on the next one.
“The half-percentage-point hike essentially equates to $25 more per monthly payment for every $100,000 loan,” he points out.
The adviser reminds that penalties apply when you “break” a mortgage, for example when you sell the house.
Since the penalties are lower with a variable rate, he “absolutely” recommends that those who may be thinking of selling in five years to go with this option.
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