Mortgage Holders Pay Hundreds More As Interest Rates Rise


In just a few months, Lauren Gilbert says her monthly variable rate mortgage payments have increased by almost $1,000 following a series of interest rate hikes imposed by the Bank of Canada.

Gilbert and his partner, Curtis, bought their first home together in Pitt Meadows, British Columbia, last year. As of March 2022, their monthly payments are around $2,400. But after several hikes in the central bank’s key interest rate, including a 1% increase in July, Gilbert saw his monthly bill climb to around $3,300 by the end of September.

« It was just really a lot of panic, » Gilbert told on Nov. 3. « It’s so over our budget. Something that’s really important to us is [having] a family, but when you think about losing $1,000 over as many years as it lasts, it’s pretty hard to swallow.

Gilbert is one of dozens of Canadians who have contacted to share the impact of rising interest rates on their personal finances. Not all email responses have been independently verified.

Canadians with variable rate mortgages are particularly sensitive to interest rate increases, as interest levels on their loans fluctuate with the Bank of Canada’s key rate. This means that their monthly interest payments will increase as soon as the central bank raises its key rate.

There are also different types of variable rate mortgages. With an adjustable rate mortgage, interest rate hikes by the Bank of Canada will cause the entire mortgage payment to increase. The principal, which is used to repay the loan, remains the same, while the amount paid in interest increases.

With a standard variable rate mortgage, however, borrowers make fixed payments that are constant from month to month, but the amount of money allocated to principal versus interest will fluctuate.

When the Bank of Canada raises its key interest rate, it is possible for those with standard variable rate mortgages to hit what is known as a trigger rate. This is when the interest rate on a person’s mortgage has increased so much that their regular payments are no longer enough to cover all the interest they owe.

That’s what happened to Gilbert, who has a standard variable rate mortgage. The Bank of Canada’s interest rate hike in September caused it to exceed its trigger rate of 4.77%, leading to an increase in its monthly payments as the couple began to agreement on a higher trigger rate in the future.

Lauren Gilbert and her partner, Curtis, appear at their home in Pitt Meadows, British Columbia

For his three-bedroom townhouse, Gilbert is now paying a variable rate of 5.29%. After the central bank’s last hike in October, just under $800 is now allocated to its principal each month and nearly $2,500 is paid in interest, she said.

« We have a little over a year to get a house, so it’s pretty terrifying, » the 28-year-old said. « We knew it would be really stressful as an owner, but far from it. »

The Bank of Canada’s benchmark interest rate is currently 3.75%. With the latest hike, which took place on October 26, the central bank has raised its key rate six times since March this year. The increases are aimed at reducing Canada’s high inflation rate, which was 6.9% in September. The bank’s objective is to reduce this figure to a target of 2%.


For parents like Puneet Mahajan, rising mortgage payments are having a significant impact on her family’s finances. Being able to pay for their house and other day-to-day expenses is a concern, he said, with his family having to dip into their savings to make ends meet.

« We used to save money in a TFSA, but that’s gone, » he told in a Nov. 1 phone interview. “Almost everything we think and talk about [is] what expenses to cut.

The 45-year-old lives in Whitby, Ont., with his wife and two children. Following the September 7 interest rate hike, Mahajan said he received a call from his bank saying he would have to increase his monthly mortgage payment by $800 to maintain the same amount of principal he was paying in April.

« I could afford $400 [more] only, so I pay a lot less principal now,” Mahajan wrote in an email to on November 1. He said he was currently paying $2,200 a month on the mortgage, with an interest rate of 4.61%.

Puneet Mahajan, a father of two living in Whitby, Ontario, is pictured here.

Rising interest rates should lead to a slowdown in economic activity that could lead to a possible recession in the first quarter of 2023, say economists at the Royal Bank of Canada. According to Bank of Canada Governor Tiff Macklem, further interest rate hikes are likely.

“This phase of tightening will come to an end,” he told a press conference on October 26. “We’re getting closer to that point, but we’re not there yet. We therefore anticipate that interest rates will have to rise further and we will determine the pace depending on further developments. »

With another raise scheduled for Dec. 7, Mahajan said he will have to find a way to shell out even more money. If interest rate hikes aren’t reduced or halted in the near future, he said his family may have to downsize so they can meet big expenses in the future, like sending his daughter to work. post-secondary studies abroad.

“That’s one of my biggest concerns – saving for college,” he said. “If things don’t improve in the next two years, I think it will. All options are on the table.

Barrington Williams, a father of three, said he found another job in June so he could pay his family’s mortgage payments. After working as a project manager during the day, he goes directly to his part-time job as a warehouse driver in the evening.

« There’s no work-life balance here, » he told in a Nov. 4 phone interview. « To be able to spend time with your family, that time does not exist. »

The 43-year-old man has an adjustable rate mortgage of approximately $600,000. Interest rate hikes implemented by the Bank of Canada between March and October pushed his monthly mortgage payments from about $2,400 to $3,600, he said. The interest rate on his mortgage is now just over five percent.

« There was no anticipation that things were going to change so quickly, » he said. « I’m worried about when it’s going to end, and how soon [my family] can resume a normal life.

« It is not normal. »


Brian Meulendyks appears with his fiancé, Drew, outside their home in St. Catharines, Ontario.

Brian Meulendyks bought his first home in the summer of 2021. The 25-year-old said he and his fiancé needed to pool their savings together to put a 20% down payment on their home in St. Catharines, Ontario . . While his mortgage broker suggested they go for an adjustable rate mortgage at the time, Meulendyks said he wanted to do things differently.

“Our mortgage broker told us it was a great idea to stay variable just because you get lower rates,” he told in a Nov. 3 phone interview. went to get my mortgage, I definitely would have locked up [a fixed rate].”

Including property taxes, the couple was paying around $1,500 for their home in July 2021. Now their monthly payment is around $2,100, he said, with an interest rate of 5.05% .

« If you look at it monthly, it’s about $600 more, » he said. « It’s not a small number…Hopefully interest rates will come down within five years to make it worth staying variable. »

When buying his first home, Adam Pekeski said he hoped for a sense of security. But with rising interest rates pushing his monthly mortgage payments higher and higher, the only feeling he’s left with is stress, he said.

« The very first thing you hope for when buying your first home is stability, » he told in a Nov. 3 phone interview. to a point where it is unaffordable.

Pekeski and his wife bought their first home in June of this year, a three-bedroom detached house in Calgary. Although he started with an interest rate of 2.7%, the couple are now paying 4.95% interest for a total of around $3,200 per month in mortgage payments. During those few months, about $800 was added to their monthly payment, Pekeski said.

A photo of Adam Pekeski’s home in Calgary.

Along with high gas prices and the rising cost of groceries, an increase in mortgage payments is making it harder for the couple to pay their monthly expenses, Pekeski said. As a result, they started looking for ways to reduce their expenses. This includes switching to a cheaper cable TV package and eating out less often.

« Cut expenses and set priorities – other than that there’s not much you can do unless you want to go get another job, » the 38-year-old said. « Things are looking bleak as a first-time owner. »

With files from CTV National News’ Jordan Gowling.


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