How much is the average mortgage payment in Canada? - MoneySense (2024)

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There’s a cost-of-living crisis affecting many Canadians in 2023. Despite inflation falling to 2.8% in June, the run-up in prices of 2022 and early 2023 have made many staples, including groceries, unaffordable for everyday people. Meanwhile, the Bank of Canada’s (BoC) efforts to bring inflation under control have increased borrowing costs to levels not seen in 20 years—creating a double whammy effect for Canadian home owners carrying mortgages.

News headlines tell of Canadians pushed to the brink by rising mortgage costs. Some have been forced to sell their homes, and others don’t know where to turn, as their mortgages now cost thousands of dollars more each month than they did just two years ago.

Yet Canadians’ spending has not dropped as significantly as the Bank expected when it started raising rates. And the Canadian housing market remains stable enough, considering today’s high mortgage rates. How did we get here?

How average mortgage payments have changed since rate hikes began

During the first quarter of 2023, the average monthly payment on new mortgages in Canada was $1,984, up 40% from $1,415 in 2019, according to the Canada Mortgage and Housing Corporation (CMHC). And the average monthly payment on existing mortgages during the same period of 2023 was $1,551, up 20% from $1,277 in 2019.

The rate at which mortgage payments are growing has accelerated and is now the highest it’s been in at least five years. Whereas monthly mortgage payments have often grown at an annual rate of 1% to 5% since 2019, the annual rate grew to nearly 13% during the first quarter of 2023.

How mortgage payments have changed across Canada

A look at the typical mortgage payment in Canadian cities reveals the biggest jumps occurred since early 2022, when the BoC began raising interest rates. The table below shows the average mortgage payment for large, medium and small census metropolitan areas (CMAs) for the first quarter of 2021, 2022 and 2023. The calculations come from CMHC and are based on Equifax data.

In many instances, average monthly mortgage payments grew only marginally between the first quarters of 2021 and 2022. Canada-wide, for example, the difference is $43 per month—similar to the increases seen in large, medium and small CMAs. But the situation changed drastically between the first quarters of 2022 and 2023, as average monthly payments climbed $179 across Canada and by more than $200 in large CMAs.

Why are some Canadians struggling more than others?

The numbers above are averages that include both fixed and variable mortgage payments. They’re helpful in understanding how typical mortgage payments have changed, but they do little to corroborate the tales of home owners whose monthly costs have doubled since rate hikes began. For that, we have to take a closer look at the difference between fixed and variable mortgage rates and do some calculations using a mortgage payment calculator.

According to CMHC data, the average new mortgage loan was $319,140 in the first quarter of 2021. We’ll use that number as a benchmark to calculate how rising interest rates have impacted fixed- and variable-rate mortgage borrowers differently.

The table below is an example based on average historical interest rates from Ratehub.ca and the mortgage renewal calculator on MoneySense. (Ratehub.ca and MoneySense are both owned by Ratehub Inc.) The calculations assume a $319,140 mortgage, obtained in March 2021 and amortized over 25 years, a term of five years and a down payment of 20%.

Canadian with an average 5-year fixed rate

Canadian with an average 5-year variable rate and fluctuating payments

Canadians who obtained a five-year fixed mortgage in March 2021 will not see their monthly mortgage payment change until 2026. On average, they are paying $1,289 per month.

Canadians with a variable-rate mortgage have seen their total costs of borrowing increase with every jump in the BoC’s benchmark rate. Remember, though, that the majority of variable-rate mortgage providers in Canada offer fixed payments to borrowers—meaning that their monthly payment amount hasn’t changed, but more of it goes to interest rather than the mortgage principle. These home owners might not feel the wallop of rising rates right away, but they will pay more for their mortgage through extended amortizations.

Canadians with a subset of variable-rate mortgages known as floating-rate mortgages—in which payments rise and fall in conjunction with changes in the BoC’s benchmark rate—have watched their payments rise significantly. On average, those who obtained this type of mortgage in March 2021 are paying $801 more each month than when they first got the loan. As of November 2022, about one-quarter of variable-rate mortgages worked this way.

When will Canadians find relief with mortgage rates?

Only a small portion of Canadians with mortgages have felt the full impact of higher interest rates. For many home owners, the pain of higher mortgage payments will come at the time of renewal. The BoC says that almost all borrowers will have to renew their mortgages before 2026, and they could see a jump of 20% to 40% in their monthly payments.

Relief for borrowers will only come once Canada’s rate of inflation returns to historical norms and the BoC can begin to cut the benchmark interest rate.

Read more about mortgages:

• Should you accelerate your mortgage payments—or invest?
• Renting vs. home ownership: Can you be financially secure without buying?
• How much you need to earn to afford a home in Toronto and the GTA
• Mortgage penalty calculator