The third Bank of Canada rate hike this year could shut more first-time buyers out of the region’s housing market and add hundreds of dollars to some homeowners’ mortgage payments.The central bank raised its key lending rate 0.25 to 1.75 per cent on Wednesday, prompting Canada’s big banks to boost their prime rates by a quarter of a percentage point to 3.95 per cent from 3.70 per cent, effective Thursday. The bank previously raised rates by 0.25 percentage points on Jan. 17 and July 11.Variable loan rates are expected to rise accordingly, adding to the carrying costs for the 32 per cent of homeowners who have non-fixed mortgages.Online mortgage site Ratehub.ca calculated that consumers who put 10 per cent down on an $800,000 home with a 25-year amortization would pay an additional $283 per month in interest if, as expected, their mortgage rate climbs to 3.19 per cent from the pre-Jan. 17 rate of 2.44 per cent.That means those homeowners that started the year with a $3,303 monthly payment, will likely end 2018 at $3,586 a month.The average cost of a Toronto-area home — including detached, semi-detached, townhouses and condos — was $796,786 in September, according to the Toronto Real Estate Board.Read more:Bank of Canada raises key interest rate to 1.75 per centInterest rate hikes put a storm cloud on political horizonOpinion | Susan Delacourt: What happened to Trudeau’s plan to fight income inequality?It was the fifth time since the summer of 2017 that the central bank raised its trend-setting rate, amplifying concerns about the slipping affordability of shelter in the Toronto area.Despite a strong economy, research shows that Canadians are struggling to pay their debt. Accounting firm MNP recently reported that 44 per cent of Canadians are $200 a month or less away from financial insolvency. An August survey of 5,074 employees for the Canadian Payroll Association showed 40 per cent of Canadian workers feel overwhelmed by debt ...
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