Almost Half of Mortgages Up for Renewal this Year
According to a report that was recently released by CIBC Capital Markets, 47% of mortgages in Canada will be up for renewal in 2018. This is a significant increase from the 25-35 per cent of mortgages that are normally up for renewal in a typical year.
This comes at a time when interest rates are starting to rise and when new regulations have made it more difficult to apply for a mortgage through the federally regulated chartered banks. Because of this, some homeowners could be in for a shock when they try to shop around for a better interest rate.
The new regulations mean that Canadians will have to pass a financial stress test when they apply for an uninsured mortgage with a federally regulated lender. The new guidelines state that homebuyers must prove that they can make mortgage payments at a defined benchmark if they are to be approved for a mortgage from one of these lenders.
Those who already have a mortgage will be exempt from the stress test only if they renew with their current lender. This creates a problem because it does not give the major banks much incentive to offer more competitive rates.
At a time when Canadians are already struggling to pay off debt, the fact that banks could potentially offer less competitive interest rates to those who are most financially vulnerable is troubling. A piece of good news in all of this however, it that the Bank of Canada is expected to keep interest rates fairly low for at least another year.
This comes at a time when interest rates are starting to rise and when new regulations have made it more difficult to apply for a mortgage through the federally regulated chartered banks. Because of this, some homeowners could be in for a shock when they try to shop around for a better interest rate.
The new regulations mean that Canadians will have to pass a financial stress test when they apply for an uninsured mortgage with a federally regulated lender. The new guidelines state that homebuyers must prove that they can make mortgage payments at a defined benchmark if they are to be approved for a mortgage from one of these lenders.
Those who already have a mortgage will be exempt from the stress test only if they renew with their current lender. This creates a problem because it does not give the major banks much incentive to offer more competitive rates.
At a time when Canadians are already struggling to pay off debt, the fact that banks could potentially offer less competitive interest rates to those who are most financially vulnerable is troubling. A piece of good news in all of this however, it that the Bank of Canada is expected to keep interest rates fairly low for at least another year.