The roughly 75,000 Canadian homeowners awaiting mortgage renewal notices next month are bracing for a shock interest rate jump due to a surprise global bond rally, which will further squeeze already t
TORONTO, Oct 7 - The roughly 75,000 Canadian homeowners awaiting mortgage renewal notices next month are bracing for a shock, unlike in the U.S. where customers can snag a 30-year mortgage. This means many Canadians who locked into sub 2% fixed-rate mortgages five years back are preparing for renewal letters with a steep
With roughly about C$200 billion in home loans coming up for renewal next year, mortgage brokers and lawyers are preparing for more distress sales in the property market. Homeowners receive a notice four to six weeks before their renewal date as lenders hatch out various options with fresh interest rates based on market trends at the time of renewal. A global move in bonds yields that has pushed the Canadian 5-year yield up by as much as 68 basis points since early September, to touch a 16-year high on Tuesday at 4.46%, will likely be reflected in the November renewals.
A sharp jump in mortgages would further tighten household budgets and aggravate the cost of living crisis which has become rallying point for many Canadians.And the mortgage pain could grow if the Bank of Canada raises its benchmark interest rate one more time over the coming months as money markets expect, from the current 5%, and likely to stay higher for longer, analysts say.
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