Canada and mortgage interest rates versus yankyville

I can’t believe moron’s are amortizing 30+. Our mortgages are 5 year max (then refinance) compared to the US (typically, 15 years+ locked into a rate)…

I wanted to share some important insights regarding the current state of variable rate mortgages in Canada. As interest rates continue to rise, the repayment period for these mortgages has been lengthening, surpassing 30 years in many cases. While this may provide some relief for borrowers facing higher borrowing costs, it also raises concerns about increased debt loads and potential risks.

In Canada, variable rate mortgages typically require borrowers to make fixed payments. As interest rates increase, a larger portion of the payment goes towards paying the interest rather than reducing the principal. This results in an extension of the amortization period and can lead to negative amortization if rates reach a trigger point where interest exceeds the fixed payment.

Data shows that variable rate loans now account for one-third of the outstanding residential mortgages held by Canadian banks, significantly higher than before the pandemic.

Unlike in the United States, where buyers can lock into a 30-year mortgage, Canadian fixed-rate mortgages renew in five years or less, exposing homebuyers to market rate fluctuations more frequently.

Interestingly, analysts estimate that over 20% of the mortgage portfolio of major Canadian banks had a repayment period exceeding 30 years in the first quarter, a substantial increase from just 2% a year ago. Royal Bank of Canada and CIBC have over a quarter of their mortgages with amortization periods exceeding 30 years, while BMO and TD also have a significant portion.

Extending mortgage amortizations poses certain risks, particularly if interest rates remain high over the coming years.

Customers may struggle to handle the increased debt burden during renewals, leading to forced home sales, a weakened housing market, or higher loan delinquencies. However, banks state that most customers have passed rigorous stress tests to handle higher rates.

The Bank of Canada has not provided specific comments, but Senior Deputy Governor Carolyn Rogers highlighted that extending amortizations serves as a useful “release valve” for temporary payment increases. Canada’s banking regulator, OSFI, has urged banks to address the risks associated with amortization extensions and resolve negative amortization as early as possible.

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How do you mitigate getting fucked every five years?


What’s the conversion rate? How many imperial years is 5 metric years


Move to the US(and then vote for the same policies that made you leave Canada)


pretty sure you guys amortize over 25 years, your rate is just locked for 5. we do amortize over 30 years (sometimes 40) and lock the rate for anywhere from 6 months to 40 years.


Canada needs a viable 30-year fixed rate mortgage product. I couldn’t imagine being in a position of having my mortgage rate reset this year.


their rates are way more stable than ours.

from the recent high in 2018 to the low in 2021 our average mortgage rates moved 250+ basis points. theirs moved 55. their current rates are still 75bps lower than ours. and the most recent run-up was only about 180bps in canada. it was 450bps here.

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Stop pushing communism on us!

Right, but they can’t lock in the low rate for an extended period of time. Their rates may always be lower than ours on a given date, but if I can lock in 2.5% for 30 years in 2019, which I did, the fact that their reset rate of 7% in 2024 is lower than the current US rate in 2024 is meaningless. I’ll still have 2.5% in 2024. And 2034. 2044.


i much prefer our system. i’m just saying, their mortgage system is very different than ours. it’s not just the variable vs fixed rate difference.

maybe you will. maybe you’ll move. not all americans are locked at 2.5% and there’s no guarantee the ones that are will be able to hold on to that mortgage forever. there will always be people buying and selling houses.

locking in at 2.5% is a very sweet deal many of us get to enjoy, but you probably remember when interest rates broke 7% and 6% and then 5% etc. every time it was a holy shit moment because the differences were so huge. canadians just haven’t seen the swings (either way) that we have. i mean imagine having to sell a 2.25% mortgage and buy one at 7.5%. the difference in your payment for the same loan would be almost double.

Pretty much the same in Australia. I managed to lock in 1.88% for 4 years, it finishes Dec 2024. The current variable rate is 5.7%, fixed is around 5.8%.
A lot of people r getting reamed


Amortization is not the factor in yankyville. Moron’s in Canada who jumped in (via FOMO) to compete with folk with deep pockets have to remortgage in 5 years vs a 15 year mortgage rate down south. I am a geek and look at numbers - 2017/8 rates in Canada were free money times (all the way up to 2021). Things won’t end well imo…

(Now) Ken (a Canadian) explains it - it will (and should) be a ton worse up North.

My kids (older) know this movie inside and out. I know ever line lol. This should be shown in school’s imo…


Which means people will either sell or they’ll extend their mortgage term.

Anyway in the UK… they do interest only mortgages… basically renting the house straight from the bank.

Well, I thought we were friends. The Canadian wall just got 10 metres taller guy smh…

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It’s not what you think. I find it funny people take EFM so out of context and irrationally dislike his posts, So from time to time, I throw him under the bus and then sit back and have a good laugh while he defends himself after every post making it worse and worse. Of course this is done all in good fun and for his benefit. I’m helping him build character. Doesn’t really matter what he says at this point, 10 people who haven’t posted since 09 come out of the woodwork to tell him he’s wrong.


I get it but I enjoy @EFM posts - makes me do a confirmation when he counters…


those were popular here until 2008/2009. they’re really useful too if you have equity in your house and are in a stable market. i know several people that put 30-60% down and just had IOs. why not? also work for rental properties. lots of commercial re deals are IO.

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Forced ARMs stuck big time, especially when rates were under 2% just 2 years ago!