Donald Trump may have something to say about it, but the trend for mortgage rates in 2025 is favourable. Rates could tick higher, but we’ll remain well below the peak of recent years.
The outlook for two other foundational costs of home ownership looks more challenging. Both property taxes and property insurance costs are riding a wave of cost increases that looks like they will continue in the year ahead.
An excellent tool for looking at inflation overall and in all kinds of spending categories was launched recently on The Measure Of A Plan website. You can compare several different categories of inflation at once – I chose to look at mortgage interest costs, property taxes, property and mortgage default insurance costs, as well as the overall inflation rate.
Mortgage interest costs jumped 51 per cent from October 2019 through the same month of this year, compared with 18.4 per cent for all items. The next most alarming cost increase was insurance, up 37.7 per cent. Property taxes jumped 19.1 per cent, but with a twist. A hefty portion of that increase occurred in the past year.
Earlier in 2024, I wrote about how cities across the country were increasing property taxes by 6 to nearly 10 per cent. Cities cannot get away with this magnitude of increase every year, but there’s no getting around the rising demand for spending on social services and improvement of outdated infrastructure, including transit.
Home insurance is the stealth problem for homeowners worried about cost increases. If you go back to 2000 using the Canadian Inflation Tracker, you’ll see a total 287.5-per-cent rise in insurance costs. The all-in inflation rate increased by 68 per cent, mortgage costs by 75 per cent and property tax by 103 per cent.
Climate change in the form of violent weather is driving higher insurance costs, but so is the higher cost of building materials. Add monthly insurance and property tax costs together and you easily get to $500 to $600 and up in many cities. That’s quite the add-on to payments on a mortgage that reflects recent interest rate increases.
Send me your anecdotes about how much the cost of property tax and insurance for your home has risen lately – rcarrick@globeandmail.com. For context, include the size of your home and your city.
As for U.S. president-elect Trump, there’s speculation that his economic policies could stoke inflation. If interest rates rise as a result, expect mortgages rates to do likewise in the near term.
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Rob’s personal finance reading list
What to do with RRSPs in your 60s
Thoughts on whether to keep contributing to registered retirement savings plans in your later working years. There are arguments for stopping contributions, and for continuing on.
The New Yorker takes a look at the new and growing business of helping people get over break-ups. Forget the idea of letting time heal these wounds. People are willing to pay for help right now.
What salary equals financial success?
Americans of various ages were asked this question and had vastly different answers. Check out Gen Z’s take.
When you can’t afford to go home for the holidays
An advice columnist addresses a reader who is broke and can’t afford presents or travel over the holidays. Her family is well-off, so that’s a complication.
Podcast fans
Subscribe to Stress Test on Apple podcasts or Spotify.
Ask Rob
Q: Do you have any recommendations for financial courses? I am a DIY investor, and I would like to increase my knowledge.
A: Here are some hour-long online courses about investing, financial planning and personal finance are available through the Ontario Securities Commission’s GetSmarterAboutMoney educational arm. Unbiased information here.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Tools and guides
A survey of pet insurance products. My sense of pet ownership today is that you have to consider pet insurance as a way to cope with potentially high vet costs.
In the social sphere
Social Media: A vigorous Reddit discussion of the merits of low-cost exchange-traded funds compared with higher cost mutual funds.
Watch: “I’m really sick of overspending, over consuming and making a lot of impulse purchases.” Surely, this TikTokker can’t be alone.
Money-Free Zone: The Rev. Al Green’s new cover of Everybody Hurts by R.E.M. is heavenly.
More PF from The Globe
- Luke, 58 and Nora, 52, are sitting on a pile of cash. How should they start investing it?
- Consider being charitable as we celebrate Giving Tuesday next week
- Five costly mistakes to avoid in your 40s for a better retirement
- Investors have fled preconstruction condos and no one knows when they are coming back
