Mortgage costs that have risen drastically are contributing to sticky inflation creating a “vicious feedback loop” that will be difficult to break, experts say. In April, as more Canadians renewed their mortgages at higher interest rates, mortgage interest costs shot up 28.5 per cent from a year ago. Without mortgage costs, headline inflation would be 3.6 per cent — much closer to the Bank of Canada’s target of around 2 per cent. “But I wouldn’t confuse this with thinking that higher interest therefore causes inflation … in this specific category, they do for a while. By raising prime rates the Bank has contributed to higher mortgage costs, which in turn, keeps inflation sticky, said mortgage broker Ron Butler.

Source: thestar May 18, 2023 20:31 UTC