Residential Property & Mortgage Rate Vulnerability

Susceptibility to Mortgage Rates

A recent study from RBC shows that Canadians (35-44) are deeply in debt mainly due to the high prices they have paid on their property. This data is based on Statistics Canada from ’99 to 2012, and over this time, 60 percent of the increases was due to increasing property prices.

The time period from ’99 to 2012 was showing a 4.6 percent property appreciation, that being compared to the previous 20 years which was showing 0.3 percent per year property appreciation.

average residential property price in Toronto

 

From the chart above, we can see for the Greater Toronto area, from Jan 2011 to Jan 2015, the average residential property price went from around $425,000 to just over $550,000.

The following Mortgage rate data below is taken from the Bank of Canada, then the average was calculated for the full year.

We can see a steady decline in interest rates over the past 20 years, and mortgage rates are at record lows. Even with the average mortgage rates declining over the years, current Canadians (35-44) are not paying off their mortgages at faster rates the RBC study has found.
For the next little demonstration, we will look at a property purchased at today’s Residential average price for the Greater Toronto area. Then we will see what the actual mortgage rate would be based on some of the past yearly average mortgage rates.

Average Residential Mortgage

The idea here is to show you just how much of a change in your mortgage payments will happen with some of the past historical mortgage rates.

Amortization rate for the calculations will be 25 years.
Rate type is based on 5 year fixed (average)
Payment Frequency is set to Monthly.
Average Residential property price will be for Jan 2015 at $550,000

 

Mortgage Amount: $550,000
Interest Rate: 4.08 (Yearly Average for 2014)
Payment Amount (Monthly): $2,917.02

 

Mortgage Amount: $550,000
Interest Rate: 5.05 (Yearly Average for 2009)
Payment Amount (Monthly): $3,214.51
Payment Increase Per month (vs 4.08%): $297.49

 

Mortgage Amount: $550,000
Interest Rate: 6.04 (Yearly Average for 2003)
Payment Amount (Monthly): $3,532.03
Payment Increase Per month (vs 4.08%): $615.01

 

Mortgage Amount: $550,000
Interest Rate: 7.18 (Yearly Average for 2001)
Payment Amount (Monthly): $3,913.61
Payment Increase Per month (vs 4.08%): $996.59

 

Mortgage Amount: $550,000
Interest Rate: 8.02 (Yearly Average for 2000)
Payment Amount (Monthly): $4,204.70
Payment Increase Per month (vs 4.08%): $1287.68

Interest Rate Hike Vulnerability

Just from the sample data above, we can see that with just under 1 percentage interest rate hike adds on just under $300 to the monthly mortgage rate. As with any debt that you have, the sooner you can pay it off, the less interest you will be paying. With the sizeable mortgages young Canadians have, keep your overall expenditures in check, pay your debts and save for the future.

Take Your First Step Towards A Debt Free Life

If you are overwhelmed by debt and live in the Toronto area, call us at 416-498-9200 to book a FREE, confidential appointment. We will review your financial situation in detail and discuss all of your options with you. Alternatively, you can fill out the form below and our team will reach out to you. 

Share This!

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on pinterest

Ready to live debt free?

The best decision I've made was to contact David Sklar & Associates, they are experts in this matters and also have dedicated Licensed Counsellors that provide the best customer support, like Rhoda Lewis, who I highly recommend. She worked tirelessly on my case, explaining ever detail to me willingly. She demonstrates a true interest in her clients. I appreciate how she patiently walked me through what to do, step by step. I now have control over my finances, as a result my life is much more peaceful and I can focus on what matters. Thank you!
Nilda H.
20:18 16 Jun 22
Very helpful and friendly! I am more than satisfied with my experience here. And more than happy with the outcome! Would definitely recommend .
Peggy Bulger
15:10 14 Jun 22
Jerry at David SKLAR helped me thoroughly understand my options and made me feel at ease. If you are looking at this type of service/help, I 100% recommend you give them a call.
Colleen H
12:50 14 Jun 22
Rhoda is a wonderful person, She help me and guided me throughout the process. I couldn’t do it without her support and expertise. Now I can start fresh and full of hope of a better life ahead of me.
ariezel erandio
21:33 06 Jun 22
The service I recieved from David Sklar and Associates was great. I was able to meet with Christin Sylver. She is kind, understanding and, professional. She was able to answer all the quesions that I had regarding my debt. At the end of our meetings, I felt that there is a heavy burden lifted from my shoulders. I recommend Chistine to anyone who is looking into debt relief.
Aliya H
12:11 04 Jun 22
Jerry is a very patient person, he answered all my questions and made this experience so smooth and easy for me. I was not sure what to expect but dealing with him made me feel so much better. He sure knows what he is doing and how to put people at ease for sure (should have done this long ago). I recommend him to anyone I am so glad I had him on my side and now to do my part. Thanks Jerry ur greatPattie
Patty Murphy
21:34 18 May 22
Rhoda Lewis helped me achieve a fresh start two and half years ago! She was very professional with a very warm, caring personality! I emailed her today with a question and she responded quickly. She's great at her chosen profession!!
Debbie Livingston
01:24 11 May 22
Nothing but good things to say about Jackie. She was so nice and so understand and everything was so quick and easy. In a matter of a week, there was the solution that I never thought was possible. Thank you so very much for everything that you have done. ❤️❤️❤️
Cassandra Keenan
21:05 10 May 22
I was in a lot of debt and stress, Jackie Stanley with David Sklar & Associates was very professional, and extremely helpful with getting out of debt. I should of did this sooner, they take the all the weight and stress of a persons shoulders, amazing team at David Sklar & Associates!!
Hubert Z
03:08 10 May 22
Jackie helped me out during a really tough time and she made the entire process very easy and painless. I highly recommend reaching out to her if you find yourself in any financial trouble. You won’t be disappointed!
prettylush 13
02:42 10 May 22
js_loader