With millions of mortgages coming due, finance minister expects banks 'to work with' Canadians
New mortgage charter isn't binding but Freeland believes lenders will follow it
Finance Minister Chrystia Freeland expects banks will follow a new series of rules and guidelines designed to protect Canadian homeowners, millions of whom are set to renegotiate loans at potentially higher rates.
"The thing that I hear the most right now is people are concerned about interest rates, especially people who have mortgages and are concerned about the renewal of their mortgages," Freeland said in an interview airing Sunday on Rosemary Barton Live.
"And I think that is very understandable," she told CBC's chief political correspondent Rosemary Barton.
A report released by Royal LePage suggests over three million Canadians are facing mortgage renewals in the next 18 months. Many can expect significantly higher monthly payments as a result.
That's causing anxiety among homeowners, some of whom told CBC News they expect to make significant lifestyle changes to accommodate the higher cost.
Bikramdeep Singh told CBC News in Vancouver that he expects his mortgage payments to rise by 30 to 40 per cent when it is renewed next year.
"That's going to be a significant chunk of money I'm spending every month," the homeowner said earlier this week. "That's going to affect definitely my lifestyle. I'm going to make adjustments."
In Surrey, B.C., Kevin Larkin is facing renewal in January.
"I've been running the numbers, and I don't see how I'm going to be able to renew and afford this," he said. "And it's unfortunate. I'm a professional. I work. I'm trying to support a family."
As part of the fall economic statement released on Tuesday, Freeland introduced a Canadian Mortgage Charter, a non-binding set of guidance and expectations Ottawa has laid out for the banks in relation to mortgages.
The charter — which does not have the force of law — includes measures including the ability to temporarily extend amortization periods, ending a stress test when switching lenders at the time of renewal, and waiving some fees.
Asked whether banks could be trusted to follow the guidelines without a clear enforcement mechanism, Freeland said she believed the interests of the government, banks and everyday Canadians are aligned on this issue.
"It is my hope — but also really my belief — that the banks are going to work with us, the government, and work with Canadians to act on these commitments."
"It's a serious thing for the finance minister to publish — in black-and-white, in both official languages — our expectations for how the banks will be supporting their customers. That in and of itself is a big deal," she said.
Freeland noted that it was important for Canadian homeowners to be aware of the rules and know what to expect when they speak to their banks.
"Canadians need to know about it, that's why I emphasize it so much," she said.
Focus on interest rates
Freeland also didn't rule out additional measures in a spring budget.
"We're going to watch it like a hawk — like a bunch of hawks, at finance — and definitely, we're prepared to do more as needed."
Freeland, who is also deputy prime minister, said her other focus is for broad improvement of the state of the economy, such that the Bank of Canada feels comfortable lowering rates without fear of renewed inflation.
"Because that really is the best outcome for everybody," she said.
Inflation has fallen in Canada from a high of 8.1 per cent in June 2022 to 3.1 per cent last month.
Meanwhile, the Bank of Canada's benchmark interest rate has risen to five per cent, and bank governor Tiff Macklem hinted this week that might be enough to wrangle rising prices.
Freeland emphasized that it was important Canada has so far been able to pull off a "soft landing" from the disruption of the COVID-19 pandemic and avoid an intense recession.
Conservative Leader Pierre Poilievre harshly criticized the government's approach when it was released earlier in the week.
"With this $20 billion of costly new spending, this update can be summed up very simply: prices are up, rent up, debt up, taxes up, time's up," he said.
"Common-sense Conservatives will vote no confidence on this disgusting scheme. After eight years of this prime minister, he is not worth the cost. And today he's adding another $20 billion to inflation, which will put pressure on interest rates."
With files from Rosemary Barton, Lisa Mayor, Jon Hernandez and CBC News