Half of variable-rate mortgages have hit their trigger rate, estimates Bank of Canada
That’s about 13 per cent of all Canadian mortgages
OTTAWA — Bank of Canada senior deputy governor Carolyn Rogers says the adjustment to higher interest rates will be painful for recent homebuyers with variable-rate mortgages.
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Speaking before the networking group Young Canadians in Finance in Ottawa Tuesday, the senior deputy governor says the share of households with a variable-rate mortgage has increased over the last year.
New research from the Bank of Canada finds that variable-rate mortgages now account for about one-third of total outstanding mortgage debt, up from about one-fifth at the end of 2019.
According to her prepared remarks, the senior deputy governor says mortgage costs have already gone up for some Canadians and warns they’ll likely go up for others as well.
In a research paper released with the speech, the Bank of Canada estimated that about 50 per cent of variable-rate, fixed-payment mortgages have reached their trigger rate, the point where additional payments may be needed. That’s about 13 per cent of all Canadian mortgages.
Rogers says risks around Canada’s financial stability are elevated because of high levels of household debt along with rising interest rates.
However, the senior deputy governor says the Bank of Canada expects the financial system as a whole to withstand this period of stress.
Additional reporting by Bloomberg
