Posted 11/3/2023, 11:17:00 PM
Bank of Canada Warns Rising Rates Could Lead to Negative Amortization for Some Variable Rate Mortgages
- Bank of Canada concerned about variable rate mortgages with fixed payments leading to negative amortization
- Rapid interest rate hikes have pushed some variable rate mortgages into negative amortization
- Negative amortization occurs when interest exceeds fixed payment, increasing loan principal
- Bank says negative amortization concerning for banks and mortgage holders
- Bank open to further rate hikes until confident core inflation nearing 2% target