Most expect another hike tomorrow, and the market is putting high odds on a quarter-point increase, which would take the rate to 4.5 per cent.
Signs of stress have been showing up in the Bank of Canada’s own indicators, says Capital Economics. The Bank uses the share of new mortgage borrowers with a debt service ratio of more than 25 per cent of income to identify financially vulnerable households. That share has grown from 12 per cent before the Bank started hiking to 27 per cent in the third quarter. Capital calculates that the share is on track to reach 35 per cent this quarter.
“However, the recent OSFI announcement could push more buyers into the market to purchase before they become unable to do so. Especially if it looks like the consultation will lead to changes in loan-to-income and debt-to-income ratios.” RATESDOTCA says for every 25 bps increase a homeowner with a variable-rate mortgage can expect to pay about $14 more a month per $100,000 of mortgage.
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