Millions of mortgages maturing: Ottawa hopes banks will “collaborate” | RCI

“What I’m hearing most right now is that people are worried about interest rates, especially those who have mortgages and are worried about renewing them,” Freeland said in an interview broadcast Sunday on the show Rosemary Barton Live.

A report published by Royal LePage suggests that more than three million Canadians face mortgage renewals in the next 18 months. A considerable increase in monthly payments awaits many.

That’s causing anxiety among homeowners, some of whom told CBC News they hope to make significant lifestyle changes to accommodate the increase.

Bikramdeep Singh is one of them. He told CBC News that he expects his mortgage payments to increase between 30 per cent and 40 per cent when it comes up for renewal next year.

“It’s going to be a significant amount of money I’m going to spend every month,” the owner said earlier this week from Vancouver. “It’s definitely going to affect my lifestyle. I’m going to have to make adjustments.”

In Surrey (British Columbia), Kevin Larkin faces renewal in January.

“I’ve been doing numbers and I don’t see how I’m going to be able to renew and afford it. It’s a shame. I’m a professional. I work. I’m trying to support my family.”

As part of the fall economic statement released Tuesday, Freeland unveiled a Canadian Mortgage Charter, a non-binding set of guidance and expectations Ottawa has set for banks regarding mortgages.

The Charter – which does not have the force of law – includes measures such as the possibility of temporarily extending repayment periods, ending a stress test when changing lenders at the time of renewal and waiving some commissions.

Asked whether banks can be trusted to follow the guidelines without a clear enforcement mechanism, Freeland said she believed the interests of the government, banks and Canadians were aligned on the issue.

“I have the hope – but also the conviction – that the banks are going to work with us, the Government, and with Canadians to fulfill these commitments,” he reiterated.

As millions of mortgages come up for renewal at much higher interest rates, the new guidelines are intended to help protect homeowners, but some say the measures don’t go far enough.

Freeland said it’s important for Canadian homeowners to be aware of the rules and know what to expect when talking to their banks.

“Canadians have to know this, that’s why I emphasize it so much,” he emphasized.

Rates in the spotlight

Freeland also did not rule out additional measures in the budget the government will present in spring 2024.

“We’re going to watch it like a hawk – like a bunch of hawks, in finance – and we’re certainly willing to do more if necessary.”

Freeland, who is also deputy prime minister, said her other goal is an overall improvement in the state of the economy, so that the Bank of Canada feels comfortable lowering rates without fear of new inflation.

“Because that’s really the best outcome for everyone,” he said.

Inflation has fallen in Canada from a peak of 8.1% in June 2022 to 3.1% last month.

Meanwhile, the Bank of Canada’s benchmark interest rate has risen to 5%, and the bank’s governor, Tiff Macklem, hinted this week that it could be enough to curb rising prices.

Freeland stressed the importance of Canada so far being able to smoothly overcome the imbalances caused by the COVID-19 pandemic and thus avoid a strong recession.

Canada’s deficit is projected to grow to $1.4 trillion over the next five years. Andrew Chang explains that while high national debt differs from personal debt, experts say it comes with a price.

Conservative leader Pierre Poilievre harshly criticized the government’s approach when it was announced earlier in the week.

“With these 20 billion of new and expensive expenses, this update can be summarized very simply: prices go up, rents go up, debt goes up, taxes go up,” time is up, he said.

“Conservatives with common sense will vote against this disgusting plan. After eight years of this Prime Minister, it is not worth what it costs. And today it adds another 20 billion to inflation, which will put pressure on interest rates,” he added .

Fuente: CBC News | Christian Paas-Lang

Adaptation: RCI | MG Aguzzi