TORONTO, Australia — From ultra-low interest rates that led to a huge spike in real estate demand to the speed with which interest rates shot up to levels not seen in a generation, it’s been hard to keep up with the shifting landscape for mortgage holders.
Those with full variable rates have already taken on the burden of higher rates, seeing their payments rise an average of 49 per cent as of this year. More than 46 per cent of Canadian mortgages had payment schedules longer than 25 years as of the second quarter, according to the Bank of Canada, an amount that’s been steadily rising from around 32 per cent in the summer of 2020.
As extended amortizations fall out of favour, borrowers may have to come up with a lump sum or increase their monthly payments to bring their loans back in line, which the regulator suggests as the preferred options.Coming up with the funds could prove challenging for many though, as cracks start to show in credit markets.
She said she’s heard from clients who are surprised to learn just how high interest rates have climbed, especially since they have to pass the mortgage stress test if they want to switch lenders.“They have great credit, they have great income. But it’s that qualification that pushes them into the alternative space.”
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