However, the overall trend for the effective interest rate remains upward, analysts warned
Compared to 2018, Canadians are paying for lower loan interest rates this year, according to Bank of Canada data.
On a monthly basis, the effective interest rate went up by 0.27%, reaching 3.70% as of November 1. However, while this was 6.09% lower year-over-year, the overall trend has been “within a single basis point since August,” real estate information portal Better Dwelling stated.
“The rate is lower than last year, but the longer-term movement is still towards higher rates,” the analysis of the BoC figures added, noting that any recent declines have been more than offset by the gains seen over the previous years.
“Last year, rates during the same week were up 14.53% from a year before. The year before that, they increased 14.29% from the year before. Overall, rates are 9.79% higher over the past 5 years,” Better Dwelling explained. “Before 2018, you would have to go back to 2011 to find rates this high.”
These developments came in the wake of latest debt data from the central bank. The national household debt balance established a new record high of $2.24 trillion in September, which was a 3.8% annual increase (up by around $82 billion).
Mortgages accounted for a majority of this growth, representing $1.6 trillion of the September measure. This was a 4.2% year-over-year gain (up by $63.8 billion), a surge that the BoC attributed to relaxed credit requirements.
