Canada\u0027s bank regulator says it is preparing for strain in the housing market to potentially last throughout the year.
The risk outlook is meant to remind everyone that while finances look strong, the risks are still out there, he said.
The regulator is also taking a closer look at how banks are handling variable rate fixed-payment mortgages, which keeps monthly payments the same even as interest rates rise by putting less and less of the payments towards the principle. The payments for some borrowers aren’t even covering interest costs through, so banks have been stretching out the amortization period.Article content
The regulator is actively assessing the risk and looking into whether banks are putting enough capital aside for potential issues from borrowers with the product. “Generally we’re seeing across all lending sectors, including commercial lending, slowdown in credit growth,” said Routledge. “Anecdotally, I would characterize it as so far as a manageable, not extraordinary slowdown.”Article content
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