this post was submitted on 07 Jul 2023
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Canada Adds Guidelines for Banks to Prevent Mortgage Defaults (www.bnnbloomberg.ca)
submitted 1 year ago by [email protected] to c/[email protected]
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Canadian banks need to take steps to assist mortgage holders who are struggling to stay above water after a rapid spike in interest rates, according to new guidelines issued Wednesday.

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[–] [email protected] 4 points 1 year ago* (last edited 1 year ago)

Canadian banks have been seeing a rise in such negatively amortizing mortgages, with the expected time for a borrower to pay back the loan sometimes stretching past 30 years. At least one quarter of the Canadian mortgage portfolio at Toronto-Dominion Bank, Bank of Montreal and Canadian Imperial Bank of Commerce are now in that category. And nearly a third of Royal Bank of Canada’s domestic borrowers are are covering their interest only, so their amortizations are extending too.

Oh boy... 😬 At these proportions, the banks don't have a choice but to stretch the amortizations.