Finance Minister Chrystia Freeland expects banks to follow a new set of rules and guidelines to protect Canadian homeowners, millions of whom have potential The loan will be renegotiated at a higher interest rate.
“The number one thing we hear right now is people are worried about interest rates, especially people with mortgages worried about renewing their mortgages,” Freeland said in an interview on Sunday. That’s what I mean.” rosemary burton live.
“I think that’s very understandable,” she told CBC’s chief political correspondent Rosemary Barton.
report Released by Royal Lepage It suggests that more than 3 million Canadians will face mortgage renewal within the next 18 months. As a result, many people can expect their monthly payments to increase significantly.
This is causing anxiety among homeowners, some of whom told CBC News they expect to make significant changes to their lifestyles to cope with the higher costs. There are some too.
featured videosCBC’s Chief Political Correspondent Rosemary Barton speaks with Chrystia Freeland, Canada’s Deputy Prime Minister and Minister of Finance, about the new Canada Mortgage Charter and whether it will help Canadians in need.
Bikramdeep Singh told CBC News in Vancouver that he expects mortgage payments to increase by 30 to 40 per cent when mortgages renew next year.
“This is going to cost me a significant amount of money every month,” the homeowner said earlier this week. “It’s definitely going to affect my lifestyle. I’m going to adjust.”
In Surrey, British Columbia, Kevin Larkin’s contract is up for renewal in January.
“We’ve been putting up numbers and we have no idea how we’re going to renew and cover this,” he said. “And it’s unfortunate. I’m a professional. I have a job. I’m trying to support my family.”
As part of his fall economic statement released Tuesday, Freeland introduced the Canada Mortgage Charter. It is a set of non-binding guidelines and expectations that Ottawa has set for banks regarding mortgage lending.
The charter, which is not legally enforceable, includes measures such as the ability to temporarily extend the amortization period, end stress tests when changing lenders at renewal time, and waive some fees.
Asked whether banks could be trusted to follow the guidelines without a clear enforcement mechanism, Freeland said he believes the interests of the government, banks and ordinary Canadians are aligned on this issue. Ta.
“It is my hope, and indeed my belief, that the banks will work with us, work with the government, and work with Canadians to live up to these commitments.”
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“It’s a big deal for the Chancellor of the Exchequer to publish, both in black and white and in the official language, our expectations about how banks support customers. That in itself is a big thing,” she said. Ta.
Freeland noted that it’s important for Canadian homeowners to be aware of the rules and know what to expect when talking to their bank.
“Canadians need to know about this. That’s why I emphasize it so much,” she said.
Pay attention to interest rates
Freeland did not rule out additional measures in his spring budget proposal.
“We will be watching this situation closely like a pack of financial industry hawks, and we are certainly prepared to do more if necessary.”
Freeland, who is also deputy prime minister, said another focus is broadly improving economic conditions so the Bank of Canada can feel comfortable lowering interest rates without fear of reigniting inflation.
“Because that’s really the best outcome for everyone,” she said.
Canada’s inflation rate fell from a high of 8.1% in June 2022 to 3.1% last month.
Meanwhile, the Bank of Canada’s benchmark interest rate has risen to 5%, which Bank of Canada Governor Tiff Macklem suggested this week may be enough to stem price increases.
Freeland emphasized that it is important that Canada has so far been able to successfully make a “soft landing” from the disruption caused by the COVID-19 pandemic and avoid a deep recession.
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Conservative leader Pierre Poièvre harshly criticized the government’s approach announced earlier in the week.
“With this $20 billion in new high spending, this update can be summed up very simply: prices are going up, rents are going up, debt is going up, taxes are going up and time is running out,” he said.
“Common sense conservatives will give a vote of no confidence in this abhorrent plan. After eight years in this prime minister’s office, he is not worth paying that price. And today, he has announced another $20 billion… That would accelerate inflation and put pressure on interest rates.”
featured videosConservative Party leader Pierre Poièvre criticized the more than $20 billion in new spending promised in the federal government’s autumn budget update.
