Higher borrowing costs mean more households are expected to face financial pressure in the coming years.
“While most households are proving resilient to increases in debt-servicing costs, early signs of financial stress are emerging,” the review stated.
Mortgage payments could spike as much as 40 per cent in three years for those on variable-rate mortgages with fixed payments, while those with fixed-rate mortgages could see their payments increase by 20 to 25 per cent over 2022 levels. The U.S. bank failures highlighted the need for Canadian institutions to be more vigilant as they adapt to higher interest rates, it added, noting that “Canadian banks remain robust, but there are not immune to international developments.”Article content
The central bank said if the cost of wholesale funding for Canada’s large banks were to rise significantly due to global financial stress, it could lead to Canadian institutions tightening their lending conditions.
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