Not surprisingly, mortgages are the first to be affected by the increase announced on Wednesday.
For example, a home purchased in Quebec City for $380,000 in May 2022, with a down payment of 5% and a mortgage rate of 1.75%, finds itself as of Wednesday with a mortgage rate of 6.25% due to a series of increases.
If a buyer had to pay monthly installments of around $1,700 at first, they’ll be over $2,350 with Wednesday’s increase. An increase of more than $550 will be taken every month for the new owner.
Interest rates have skyrocketed. It affects the market, the purchasing power of buyersestimates Dave Pichette, director and president of Re/Max Fortin Delage, in Quebec.
He warns that several first-time buyers may stop their project. The lucky ones can turn to their parents.
There are many parents, who reach a certain age, that the house is paid for, we can lend a hand to the children for the purchase of property..
Good news, however: unlike in 2021, buyers will be able to negotiate more than in the big real estate market.
Buying a stranded car
Car finance rates are also suffering.
We had an interest rate of 3.4%, there, we go up to 7% for purchases, then we go up to 10% for rent.testifies Simon Brassard, senior sales manager at Capital Chrysler.
It is certain that people are postponing their project a little until the summer to see if the rate will drop. Payments, sometimes double, go up to $500, $600 a month. It changes purchasing power. Rising prices are not good for our industry.
The situation has changed a lot since the epidemic, when the lack of cars was the main issue.
” We ran out of cars and had good rates. There, we have cars, but we have slightly higher standards. It changes things. People who were waiting for cars to enter the stadium are jumping when they return. »
Hunger never takes a break,
the middle class is getting poorer
If the wealthy can afford to delay major purchases, others have recently been forced to turn to food aid agencies.
When we saw that this morning, we said to ourselves: “well, there will still be many people”, testifies Marie-Pier Gravel, assistant director at Generous Bouchée, in Quebec. It increases the cost of living. Yes taxes, but also business taxes. Whatever they sell, they will have to increase.
Demand has already peaked, according to Ms. Gravel.
The middle class represents a new customer.
” It’s actually an increase for all workers $20 an hour, single parent families […], who now have children and can no longer make it as the price of everything increases. It is the middle class that is getting poorer and now needs to go to food banks. »
The organization serves at least 800 families per week.
By increasing the speed of the key, it will put more pressure on the familybelieves Ms. Gravel.
These frequent increases in the key rate are mainly aimed at controlling inflation, which has risen after the crisis.
With notes from Pierre-Alexandre Bolduc and Marie-Pier Mercier