Those borrowers who purchased or refinanced their home before the market began its rapid cooldown last year may be feeling some turbulence at present, according to a Toronto-based broker in the private space.

Daniel Vyner (pictured top), principal broker at DV Capital, told Canadian Mortgage Professional that variable-rate borrowers and those who used an alternative or private mortgage lender to obtain short-term financing with the intention of converting to a traditional mortgage product may be feeling especially squeezed.

“Borrowers that opted for a variable-rate mortgage, which at one point had a lower mortgage rate than a fixed-rate mortgage, perceived this as an advantage to maximize their borrowing and qualification potential,” he said.

“Others believed in the historic performance of variable rates compared to fixed-rate mortgages. Many borrowers were blindsided by multiple recent rounds of arguably unanticipated prime rate hikes.”

Francis Gosselin of nesto, told CMP that while the move was by no means a certainty, he expected the Bank to introduce a cut to that trendsetting interest rate, which heavily influences variable mortgage rates, before the year is out.https://t.co/lSC5vAH3mV

— Canadian Mortgage Professional Magazine (@CMPmagazine) April 10, 2023

How adjustable and static variable mortgages have been affected

The end result for many Canadians has been hugely problematic, according to Vyner. Not only have those with an adjustable rate on their variable mortgage seen payments skyrocket, but even scores of variable customers with fixed products have felt the impact of rate hikes.