Watchdog unveils guidelines to support mortgage holders under financial stress
OTTAWA – Canada’s consumer financial 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 should help support consumers facing rising mortgage payments.
Mortgage holders with variable rate loans have faced higher borrowing costs as interest rates have risen, while those with fixed rate loans have faced higher costs as their mortgages need to be renewed.
In guidelines released today, the federal watchdog did not recommend specific action, but says lenders should be guided by the principles of fairness, appropriateness and accessibility.
That includes waiving prepayment penalties, waiving internal fees and charges, not charging interest on interest, and extending depreciation for as short a period as possible.
It says lenders should avoid taking advantage of at-risk borrowers and renewing their mortgages by offering less advantageous rates based on their inability to amend their mortgage loan agreement or switch to other lenders.
This report from The Canadian Press was first published on July 5, 2023.
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