When you hear a bank using terms like ugly and extreme – and they’re talking about the cost of owning a home – you should probably pay attention.
Those are exactly the words contained in the latest affordability index report prepared by RBC Royal Bank when looking at Vancouver, Toronto, Victoria and even Halifax.
As interest rates go up, home ownership costs also rise. Here’s how they break it down: a one per cent increase in interest rates adds another $600 to the average monthly mortgage payment in Vancouver and $550 in Toronto.
Even though prices are starting to soften, it is not near enough to offset the impact of rising interest rates in those cities as affordability has hit a 30-year low.
But the bank also points out some exceptions. They are largely here on the Prairies as well as parts of Atlantic Canada. Regina, for example, ranks number three in Canada on the affordability index. Saskatoon is number six and a one-point rise in interest rates here bumps mortgage payments by less than $150.
