Near half of all new Canadian mortgages taken out in the first quarter of 2023 had amortization lengths longer than 30 years. In addition, as interest rates have leapt since 2022, a significant number of existing variable-rate mortgage holders have paid less than the interest owing, causing principal balances, repayment years and financial risk to leap. See Some Canadian mortgage holders extending amortization by more than double.
Victor Tran, mortgage and real estate expert at Ratesdotca, said in an interview with BNN Bloomberg Thursday that since the Bank of Canada began raising interest rates in March of 2022, some of his clients have drastically extended the amortization for their mortgages.
“I’ve had many clients with amortizations, that are 70, 80, even 90 years remaining, in the extreme cases, and that’s simply because their payments are not going towards any principle at all,” he said. Here is a direct video link.
This week, banking regulator OSFI announced that the largest banks must further increase their capital reserves on hand to cover potential losses as financial system vulnerabilities have elevated. See Financial regulator OSFI raises the minimum capital amount that big banks must have on hand to cover losses:
The federal regulator said current vulnerabilities facing the banking industry include high household and corporate debt levels, the rising cost of debt and increased global uncertainty around fiscal and monetary policy.
Peter Routledge, the Superintendent of Financial Institutions, said households and companies remain highly indebted, making them more vulnerable to economic shocks.
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