Canadian homeowners' assets grew faster than payments despite rate hikes
Both housing values and mortgage payments have surged since early 2020. However, new data from Equifax has shown that home prices climbed faster than those monthly payments.
The average mortgage payment recorded on Equifax credit files hit $1,685 per month in Q4 2023. This marked a 27.7% increase since early 2020, when historically low-interest rates fuelled an unprecedented buying frenzy.
However, over that same period, the benchmark price of a typical Canadian home climbed by 28.5% – a slightly faster growth rate than that experienced by mortgage payments.
Most major Canadian cities mirrored the national trend. Calgary saw the largest gap, with home price gains outstripping mortgage payment increases by 21.3%. This was followed by Montreal, Ottawa, and Edmonton.
Canada's most expensive markets, Toronto and Vancouver, bucked the trend. Toronto saw average mortgage payments grow 8.3 points faster than home prices, while the gap in Vancouver was 7.2 points.
Eastern Canada stood out for particularly rapid home price appreciation relative to mortgage payments. In Moncton, home prices soared 65.8 points faster than the average mortgage payment.
While rising rates have been painful for recent buyers, existing homeowners with older, smaller mortgages saw their home values significantly outpace the increase in their monthly payments.
This disparity between home price appreciation and mortgage payment increases offers a partial answer to how many Canadians manage homeownership despite rising costs.
Read next: Toronto condo sales stagnate, supply challenges ahead
The gap means that many existing homeowners are not only facing smaller mortgage payments relative to new buyers but also seeing significant appreciation in their property values, helping to offset the financial strain of higher mortgage costs.
"At least buyers have an answer," the report stated. "Even with climbing mortgage payments, the appreciation, in most cases, greatly outpaced the pain of rising interest costs."
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
