Skip to main content

Rising interest rates are starting to weigh down Canadians’ confidence in their finances, according to the latest results of the MNP Consumer Debt Index.

As a result of the interest rate hikes seen so far, nearly six in 10 Canadians (57%) say they are concerned about the impact of rising interest rates on their financial situation.

The Bank of Canada has so far lifted its benchmark rate by 75 basis points, which has raised prime rate, affecting variable-rate mortgages and lines of credit. Fixed mortgage rates have also risen roughly one percentage point (or 100 basis points) over the past couple of months following a surge in bond yields to an 11-year high.

The MNP survey found more than half of Canadians (52%) say they’re already feeling the effects of interest rate increases, with two in 10 (22%) saying they’re not financially prepared to deal with a rate increase of one percentage point.

“The affordability crisis is increasing the financial pressure on Canadian households,” said Grant Bazian, President of MNP Ltd. “Many are likely to rack up more debt to keep up with the cost of living and rising interest rates—but as interest rates rise, so will the cost of servicing some of those debts, making it more difficult to pay them down.”

The survey also found that 5% of mortgage-holders are expected to renew their mortgage in the next 12 months. Coming off a period of record-low rates, the far majority are likely to have to renew at higher rates.

“While mortgage holders can be particularly vulnerable to interest rate changes, their acute awareness of this vulnerability will hopefully help them prepare for the potential impact of future rate hikes,”

says Bazian

HomeEquity Bank surpasses $1B in reverse mortgage origination

HomeEquity Bank reported over $1 billion in reverse mortgage originations in 2021 for the first time ever.

This is a 28% increase from 2020, and brings the total value of its reverse mortgage portfolio under management to $5.4 billion, the company confirmed.

HomeEquity says it is “well-positioned for sustained growth as more Canadians near retirement age” and seek solutions that allow them to access their home equity in retirement while continuing to live in the home.

In September, HomeEquity Bank announced its acquisition by Ontario Teachers’ Pension Plan Board, subject to the receipt of required regulatory approvals, which are still pending. The deal was expected to be finalized in the first half of 2022.

Reverse mortgage lender Bloom expands to B.C.

Bloom Financial, which in September became Canada’s latest reverse mortgage provider, this week expanded its services to British Columbia.

The company now allows homeowners aged 55+ in Ontario and B.C. to access the equity in their home, with interest accruing over time and the balance payable when the borrower moves out, sells the home, or passes away.

“The rise in home prices across Canada in recent years has been especially pronounced in B.C., which has helped B.C. homeowners accumulate significant wealth in home equity,” said Bloom CEO Ben McCabe. “Unfortunately, costs of living have gone in the same direction. Bloom’s solutions help our customers transform some of that housing wealth into real purchasing power, allowing them to live better in retirement.”

Bloom is the first fintech entrant in the reverse mortgage space, and as such, focuses on leveraging technology to simplify and digitalize the application process.

Newton Velocity will be available in French as of May 1

All aspects of the Velocity broker operating platform will be available in French starting May 1, Newton Connectivity Systems has announced.

“This has been a monumental effort; we felt compelled operating in a bilingual country to ensure we offer all mortgage brokers and agents the ability to conduct business in their official language of choice,” Geoff Willis, President & CEO of Newton, said in a statement.

Users will be able to navigate all aspects of the site in both English and French, from the login screen to the deal dashboard, including the application section and all associated conditions and documents.