Interest rate hike could see 30 per cent price slump

Interest rate hike could see 30 per cent price slump

Interest rate hike could see 30 per cent price slump Home prices could fall by as much as 30 per cent if there was a sudden hike in interest rates.

As part of a stress test conducted by the Canada Mortgage and Housing Corporation, it concluded that its business would suffer a loss but could withstand a hike. However, for homeowners the pain could be severe.

Interest rates are not the only risk factor for a sharp correction of home prices. A severe and prolonged depression could see a 25 per cent slump for prices.

CMHC said that none of the scenarios it has tested should be taken as predictions.