Canadian Mortgage Payments Surge In Size, Largely Due To Real Estate Prices

Canadian mortgage borrowers are getting squeezed by higher rates—that’s the narrative. Credit bureau data tends to disagree, implying surging home prices did most of the damage. Equifax data shows the average monthly mortgage payment surged higher in Q3 2022. Expected with higher interest rates, except new mortgages are rising much faster. The trend also began two years ago, when interest rates fell to a record low.

Canadian Mortgage Payments Have Surged 20% Higher Over The Past 5 Years

Canadian households have seen mortgage rates rip higher, but maybe not as high as you think. The average monthly payment reached $1,460 in Q3 2022, up 2.2% from the last quarter. Payment size is up 5.6% from last year, which is a huge increase for shelter costs. Though it’s substantially lower than the 6.8% rate of inflation, and close to average wage growth.

Canadian Average Mortgage Payment

The average monthly mortgage payment for Canadian consumers with a mortgage in Q3.

Source: Equifax; CMHC; Better Dwelling.

Canadian mortgage payments have consistently shown big growth over the past few years. An average monthly payment was just $1,220 in 2017, and has since climbed 19.3% within 5 years. The compound annual growth rate (CAGR) of 3.5% over the period is quite substantial. Especially since financing rates were much lower over this time compared to today.

Home prices explain this trend quite nicely. A benchmark home saw its price show 5.8% CAGR over the period. Even before higher rates are considered, there’s an obvious reason why the average payment was rising. 

Canadian Real Estate’s Lofty Growth Was Eroding Affordability Before Rate Hikes

Existing loan data emphasizes how payment pressure has been a home price story. The average monthly payment on an existing mortgage was just $1,440 in Q3 2022, up 5.1% from last year. The average for a new mortgage hit $1,910 in Q3, up 17.8% from a year before. A rapid surge in borrowing costs isn’t great, but home prices clearly did a lot of the damage here. 

Canadian Mortgage Payments For Existing & New Loans

The average monthly mortgage payment for existing mortgages as well as new originations in Q3.

Source: Equifax; CMHC; Better Dwelling.

A similar trend can be observed the year before interest rates began to climb. Existing mortgages had an average monthly payment of $1,370 in Q3 2021, rising 4.0% from last year. New mortgages came in at $1,620, up 11.7% over the same period. Mortgage payments on new mortgages surged 3x faster while rates were at the record low. Existing loans are also seeing growth boosted by the inclusion of aging new loans. 

Canada’s housing affordability narrative is focused largely on financing costs. Especially when it comes to variable rate products, where most of the coverage is focused. However, that’s only a part of the story, with low rates driving excess demand being a bigger driver. Even when rates weren’t rising, affordability was being eroded even faster by rising prices.

Higher interest rates have already begun to change buyer psychology, reducing prices. As a healthier demand balance forms without stimulus, most experts see affordability improving. The improvement is expected largely through lower prices though, not falling interest rates.



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  • george 1 year ago

    This cancer RE grew out of control. Hopefully some high rate-terapy will cure it.

  • Jo 1 year ago

    The larger your downpayment, the better off you’ll be. Do whatever it takes to save those pennies… I mean, nickels.

  • Mark Bayly 1 year ago

    Canada will soon attract only the most destitute immigrants. Many people are already this mismanaged upcoming disaster of a country

  • J 1 year ago

    Cancer kills at a pretty high rate – treatments are expensive and low success rate. Just like the mythical soft landing. Big world full of moral hazards out there. E.g. 88 F-35s when we’re lining up for food banks as a nation with a housing crisis. Priorities am I right?

    • ARJ 1 year ago

      Not to mention a very expensive missile system to be purchased from the US to be donated to Ukraine.

    • Small Person 1 year ago

      88 F-35s can deliver a lot of food to food banks at a super fast speed.

  • Dushan 1 year ago

    There is no clear benefit in owning with mortgage vs renting.

  • Serge 1 year ago

    So called average monthly mortgage payment is due to people using already existing properties to buy new one. These people already have or had places to live and are not part of the problem. Instead they should show what average mortgage payment looks for those first time buyers without benefit of already having property to sell and use as a major part of new property price. The bubble is so big that it is either it implodes to price levels unseen in 20 years or there is going to be very serious social problems down the road. The housing has become unaffordable for majority.

  • Bravo Zulu 1 year ago

    Aptly said ‘J’. Today’s headlines, our Trudex is buying high end weapons from our neighbor and gifting to Ukraine. Just wondering who will address the hunger and homelessness ?

  • Frank 1 year ago

    Higher rates = Higher payments = More money to the Banks pockets.
    Rich get richer, poor get poorer all over again…

  • alvarez 1 year ago

    one day the Canadians will have to cut the cord with Londonistan. Curious enough, in commonwealt countries, only banks and politicians make fortunes. But also it’s the same people who make “Social” propaganda…
    Between the bankers and political fraudsters never charged the people pay a high price! The more poor there are, the more they can put in their pocket. it’s been UK policy for 1000 years and nothing changes… the only relief to forget is that you can smoke cannabis. A mom asks who runs the canada???? one day it’s new delhi another day saudi arabia or pakistan then another day London (istan)… sending that Trudeau still in place canadians must still be in a deep koma. waking up will be painful… keep smoking long live generation z, but as they say “all good ends one day”! who will pay the bill? your own children and grandchildren and certainly not those of liberal political families!

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