Amid the current state of Canada’s housing market, many Canadian homeowners with variable-rate mortgages are “riding the whirlwind” of rising interest rates. CIBC has revealed that nearly three-quarters of its clients with variable-rate mortgages have reached their trigger rate, which is the rate at which they must convert to a fixed-rate mortgage due to Bank of Canada’s recent interest rate increases. This represents a significant increase from just a year ago when only 27% of clients had reached their trigger rate.
At the same time, Scotiabank has announced that it is intentionally slowing its mortgage portfolio growth due to concerns about Canada’s overheated housing market. The bank is taking a prudent approach to its mortgage lending and tightening its lending criteria to ensure it does not contribute to the problem.
With the Bank of Canada raising interest rates to curb inflation, the impact on variable-rate mortgages is clear, as they continue to rise. However, the majority of clients are choosing to convert to fixed-rate mortgages, which provide them with more stability and predictability in their payments. Amidst all of this, some Canadian homeowners with variable-rate mortgages are taking their chances, hoping that they will be able to continue riding the whirlwind.