Falling Prices Vs Rising Interest Rates Has Affordability Really Changed
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That’s because the cost of borrowing has surged in recent months; in efforts to tame steep inflation, the Bank of Canada has hiked its trend-setting Overnight Lending Rate five times since March, bringing it from the pandemic low of 0.25% to 3.25%. That’s the fastest hiking cycle experienced since the mid 90s, and — with a resulting Prime rate of 5.45% — has made qualifying for a mortgage materially harder, with many borrowers now stress tested in the 7% range.
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