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Canada Adds Guidelines for Banks to Prevent Mortgage Defaults

July 7, 2023 | Posted by: Kiruban Kana



New guidelines issued by the Financial Consumer Agency of Canada (FCAC) urge Canadian banks to assist mortgage holders who are struggling due to a rapid increase in interest rates. The guidelines recommend measures such as waiving fees for lump sum or pre-payments to reduce debt burden, providing a longer timeline to pay back the loan, and reducing monthly payments. The guidelines address the risks faced by mortgage holders in an economic environment characterized by high household debt, increased cost of living, and higher interest rates.

The guidelines come as Canadian homeowners grapple with the effects of significant interest rate hikes, impacting borrowers with variable-rate mortgages. Many borrowers are struggling to cover their monthly interest payments, resulting in negative amortization and a prolonged repayment period. The guidelines aim to pressure banks to offer more relief, including not charging interest on unpaid portions and waiving internal fees. Additionally, the guidelines recommend extending relief measures to fixed-rate borrowers nearing the end of their term, who may need to refinance at higher rates.

The FCAC guidelines emphasize the need for reasonable timeframes for repayment, providing borrowers with information to return to their original payment schedule, and explaining the implications of carrying debt over a longer period. The guidelines also discourage banks from offering less advantageous rates to borrowers who need to refinance due to difficulty qualifying with a different lender.

Overall, these guidelines serve as an attempt to address the challenges faced by mortgage holders in Canada and encourage banks to offer suitable assistance during this period of economic uncertainty.

If you're feeling the pressure of increased interest rates or struggling to manage your mortgage payments, reach out to CoffeeandMortgage.ca today. Our team is ready to guide you toward a more manageable financial future and help you regain control of your mortgage and overall financial well-being. Together, we'll find the right path forward.

#MortgageAssistance #FinancialSupport #InterestRates #RefinancingOptions #DebtConsolidation #FinancialPlanning #CoffeeandMortgage #ExpertAdvice

summary from https://www.bloomberg.com/news/articles/2023-07-05/canada-adds-guidelines-for-banks-to-prevent-mortgage-defaults

Kiruban Kana - Top 5% in Canada 
Ex-Banker | Vice President & Mortgage Agent Level 1
C: 416-219-4820 | kiruban@coffeeandMortgage.ca

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