Bank regulator steps in to deter banks from extending mortgages to as long as 90 years

On July 11, the Office of the Superintendent of Financial Institutions to address risks “related to mortgages with growing balances.”

Tran said the reallocation can reach a point where your payment isn’t enough to cover interest, so even when you pay, your balance will continue to grow — resulting in negative amortization. Before the bank’s aggressive rate hike campaign, negative amortization wasn’t really a widespread problem, according to mortgage broker Ron Butler. “Rates have never gone up this far, this fast,” he said. “But this is a unique moment in time.”an average interest rate of around 1.65 per cent — they’re now paying more than six per cent. “We’re talking about a 300 per cent increase. It’s absolutely massive.

Instead, OSFI said in its release that the regulations would require lenders to hold more capital against future mortgages with a growing balance and a loan-to-value ratio above 65 per cent, meaning “the outstanding balance is 65 per cent or more of the value of the collateral.”

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