The Impact of Mortgage Interest Costs on Rental Inflation Amid Population Growth

Amina Enkhbold and Serdar Kabaca

No 2026-14, Staff Analytical Papers from Bank of Canada

Abstract: This note finds evidence of a positive and nonlinear relationship between mortgage interest costs (MIC) and rental inflation: the impact of MIC on rents is small when population growth is near its historical norm, but significantly stronger during periods of rapid population growth. This pattern is consistent with a nonlinear Phillips curve, where cost pressures are more likely to feed into higher prices when demand is elevated.

Keywords: Monetary policy; Inflation dynamics and pressures; Monetary policy framework and transmission (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Date: 2026-04
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsap:26-14

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