Canadian Mortgage Renewals With Rising Rates – Which Side of the Fence Are You On?

Adjustment of mortgage rates at renewal poses risks for households but benefits banks in a rising rate environment. As long as rate increases are moderate, most households will cope, but new regulations may complicate renewal for households whose circumstances have weakened. While banks may face an uptick in mortgage loan problems, their net interest income will benefit as mortgages reset at higher rates, which helps offset the rising cost of funds. An economic downturn would likely be needed to bring significant loan problems.

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