Bank of Canada’s Carolyn Rogers flags first-time homebuyers facing 'trigger rates' as risk via financialpost
“We know higher interest rates are difficult for many Canadians — particularly young Canadians — many of whom are recent homebuyers and are therefore carrying higher debt loads,” Rogers said in aRogers pointed to inflation, volatility in commodity and financial markets as well as increased debt levels as risks to financial stability.
“We estimate that just about all variable-rate mortgages taken about between May 2020 and July 2022 are now in this position [trigger rate]” Mendes wrote. “The more that monetary policymakers raise rates, the more interest these borrowers will owe. However, as the Bank of Canada’s research suggests, that doesn’t necessarily mean all of those homeowners will need to top up payments. Some lenders will allow for negative amortization.
“Here at home, these measures also included a borrower-level mortgage stress test to ensure Canadians could continue to afford their homes when interest rates rose,” Rogers said. “And, importantly, we are not expecting a severe economic downturn with the kind of large job losses typical of past recessions.”on labour markets, Bank of Canada governor Tiff Macklem made the case that the high level of job vacancies in Canada could provide a buffer to limit layoffs in the next downturn.
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