Bank of Canada warns of steep jump in mortgage payments
Median monthly payment to increase by more than 60% for those with a variable rate mortgage, central bank report says
Homeowners due to renew their mortgage over the coming years will face steep jumps in payments, according to the Bank of Canada, with median monthly payment increasing by more than 60 per cent for those with a variable rate mortgage.
So far, many homeowners have been able to withstand the sharp rise in interest rates with mortgage defaults remaining below 0.5 per cent across Canada.
But the central bank warned that the ability of households and businesses to service their debt has become one of the main risks to the stability of the country’s financial system.
“Higher debt-servicing costs reduce financial flexibility or households and businesses and make them more vulnerable in the event of an economic downturn,” the bank said in its annual Financial Stability Report released on Thursday. …[Continue Reading]