A person walks past multiple for-sale and sold real estate signs in Mississauga, Ont., on Wednesday, May 24, 2023. Canada's financial consumer watchdog says it expects banks to support Canadians with mortgages who are experiencing severe financial stress due to the current environment of high household debt, rising interest rates and the increased cost of living. THE CANADIAN PRESS/Nathan Denette
OTTAWA – Canada’s financial consumer watchdog is warning lenders not to take advantage of Canadian mortgage holders who are facing severe financial stress as interest rates and the cost of living rise.
The Financial Consumer Agency of Canada says financial institutions need to help provide support to consumers who are facing rising mortgage payments.
Mortgage holders with variable-rate loans have faced a higher cost of borrowing as interest rates have marched higher, while those with fixed-rate loans have faced increased costs as their mortgages come up for renewal.
In guidelines released today, the federal watchdog did not recommend any specific measures, but says lenders should be guided by the principles of fairness, appropriateness and accessibility.
That includes consideration of waiving prepayment penalties, waiving internal fees and costs, not charging interest on interest and extending amortization for the shortest period possible.
It says lenders should avoid taking advantage of borrowers at risk who are renewing their mortgages by offering less advantageous rates based on their inability to adjust their mortgage credit agreement or switch to other lenders.
This report by The Canadian Press was first published July 5, 2023.
