TORONTO, Oct 20 - Canada's banking regulator said on Friday that its revised guidelines that go into effect in 2024 will require lenders to hold more capital for negatively amortizing mortgages as risks from growing loan balances grow due amid interest rates.
The Office of the Superintendent of Financial Institutions announced revised capital guidelines, including its Capital Adequacy Requirements, Life Insurance Capital Adequacy Test, Minimum Capital Test, and Mortgage Insurer Capital Adequacy Test. The regulator has been closely monitoring the impact of the interest rate hikes on Canadian homeowners while urging lenders to tackle risks from mortgage extensions.
Among Canada's big six banks, Bank of Montreal , Canadian Imperial Bank of Commerce , Royal Bank of Canada and Toronto Dominion offer fixed-payment variable rate mortgage options. Bank of Nova Scotia and National Bank of Canada's variable-rate offerings have payments that adjust upward with rates.