The lyrics of a once-popular song could be applied to mortgages: “…we all got ‘em…what do we do with ‘em?”
What to do with a mortgage has become more important than ever since the pandemic, and since the unprecedented increase in interest rates. And what more and more Canadians are doing is getting a mortgage with a longer amortization.
As in more than 30 years.
Research conducted with major lenders (BMO, CIBC, RBV) reveals that one-third of Canadians with mortgages have amortizations beyond 30 years, and some as high as 40 years. That’s an increase of 14 per cent since COVID-19 arrived. The information comes from Storeys, an online platform for real estate news.
These new-style mortgages are attractive because they enable home owners to keep monthly payments in check, at least for the short term, in the face of having to pay more interest. It’s particularly true for home owners who have had the benefit of low payments with variable-rate mortgages.
The downside, of course, is the risk of incurring more debt, as the Office of the Superintendent of Financial Institutions (OSFI) was quick to point out. To avoid that, the major lending institutions are attempting to work with clients to help them remain in their homes.
This snapshot of information is about a far more complicated subject, and you can read the entire story at Storeys.com.