Banks will have to hold more capital against certain mortgages due to negative amortization amid rising rates. Read more
and the popularity of variable-rate fixed-payment mortgages have put a growing number of mortgage holders in this position where their loan balances are actually growing, a situation referred to as negative amortization.
“These changes will help banks and mortgage insurers address risks related to mortgages in negative amortization, where payments are insufficient to cover the interest portion,” OSFI said, adding that it will not affect monthly payments for consumers who have a current mortgage term.Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc.
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