The Bank of Canada was up to its old rate tricks this week, lifting borrowing costs for the 10th time in 16 months. Here are five ways it just changed the mortgage landscape, again.
Variable-rate borrowers are sheltered at banks like BMO, CIBC and TD. They usually don’t require payment increases until customers accrue large amounts of interest. The banking regulator doesn’t like this; it seems to prefer RBC’s method. So this week, The Office of the Superintendent of Financial Institutions announced new capital rules to discourage “negative amortizations” whereby the mortgage amount keeps growing as interest accrues.
4. More borrowers will call their banks for help Hundreds of thousands of floating-rate mortgage borrowers have little or no discretionary cash left for payment hikes. Increasingly they’re tapping credit and savings to make mortgage payments, but both sources are finite. With this latest BoC hike, you can bet more folks will ask their lender for payment relief.
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