Canada’s chief bank inspector has warned that homeowners could face rising financial pressure in servicing their mortgages as many could face “significant payment shock.”
“Mortgagors will have to make up the deferred principal pay downs when they renew,” Superintendent of Financial Institutions Peter Routledge said, according to Blacklock’s Reporter. “This means they are at risk of suffering a significant payment shock.”
The country’s banks currently have $246 billion in mortgages nationwide that were charged at variable rates but with fixed payments and amortization periods—the length of time permitted to pay off the loan. These current loans were typically amortized over 25 years.