Analyst: Variable-rate mortgage holders at risk of fatigue

The Bank of Canada's massive rate increases will continue to weigh heavy

Analyst: Variable-rate mortgage holders at risk of fatigue

Consumers who have held variable-rate mortgages since the Bank of Canada’s rate increases began will likely labour under fiscal fatigue brought about by the central bank’s oversized rate hikes, according to

The Bank of Canada’s next policy rate announcement on Oct. 26 will be especially critical in anticipating the likely trajectory for the country’s variable-rate products. is expecting the BoC to increase its key overnight rate by 50 to 75 basis points.

“Anyone holding a variable-rate mortgage or balance on a home equity line of credit (HELOC) will be looking to the bank’s language to see if there are any signs that the rate hikes are nearing an end,” said James Laird, co-CEO of and president of CanWise. “This rate increase will cause more Canadians with variable-rate mortgages to hit their trigger rate and trigger point.”

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Laird said that Canadian households with less flexibility in their budgets should consider locking into fixed-rate offerings.

“Anyone with flexible household finances might hang on to their variable-rate mortgage in anticipation of future declining rates that may be needed to stimulate the economy if we end up in a recession,” Laird said. “After this rate hike, the variable rate will be harder to qualify for since the stress test will increase as well.”

The impacts of an Oct. 26 increase will likely reverberate over the next few months.

“A further oversized rate hike will put downward pressure on home prices across the country through the fall and winter market,” Laird said.