While extended amortizations and lower debt payments may enhance returns for lenders, Rogers highlighted that these adjustments could introduce greater risks for both borrowers and lenders.
She pointed out that financially stressed borrowers might use amortization extensions as a buffer, but if they reach the maximum duration, that safety net vanishes. Moreover, lenders may face higher capital demands, potentially resulting in elevated interest rates for households.
Rogers addressed the perception that Canadian households are struggling to manage rising borrowing costs as they renew their mortgages at higher rates post-pandemic.
“Our mortgage market has fared well through a period of economic turbulence and a sharp rise in interest rates. Arrears rates have risen but remain near historically low levels,” she stated.
In her speech, Rogers commended the return of inflation to the Bank’s 2 percent target, attributing this outcome to the effectiveness of the Bank’s monetary policy. She acknowledged that the recent rate hikes were challenging but ultimately necessary to stabilize prices.
