Mortgage holders are paying over 27% more on interest than principal, according to new data from Statistics Canada (StatsCan).
StatsCan data showed that interest on mortgage debt reached a new high last quarter. The spike is due to interest payments rising a lot faster than the pace of principal payments.
Mortgage interest payments hit $12.6 billion in Q4 2018, up by 3.86% from the previous quarter. The total interest paid for the quarter is 11.12% higher than last year, a new all-time high for mortgage interest paid in a single quarter.
Meanwhile, households paid $9.9 billion in mortgage principal in Q4 2018, down by 0.21% from the previous quarter. The total principal paid in the quarter is 1.07% higher than in the same quarter a year before, the lowest growth for principal payments since 2001.
The number of principal payments fell for seven consecutive quarters by Q4 2018, while interest payments rose for 13 consecutive quarters by Q3 2018. Although the number of interest payments slightly dropped in Q4 2018, its growth remains almost 10 times higher than that of principal payments.
It turns out that for every $4 paid in principal, Canadians are paying $5 in interest, according to a Better Dwelling report.
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate