Mortgage market ‘still recovering’ from BoC’s COVID rate cuts, says lender president
“I think that we’re still kind of recovering from the decision to have lowered interest rates during COVID. And the outcome of that decision sparked such an incredible inflationary time for Canadians,” he said. “I’ve been in banking for 30 years, and I’ve always seen Canadians using the equity in their home as an opportunity for them to pay for their kids’ education.
“There was almost a kind of a familiarity or a consistency with expecting a little bit of growth in the value of your home. And so when these inflationary times came through COVID, which was triggered by the very low interest rates, the average Canadian saw rapid increases in their property values – which at the time sparked them to do more than what they usually do without, necessarily, the kind of long-term perspective.”
‘There was the opinion that rates… would stay low for a long time’
In 2025 and 2026, scores of mortgages originated during the pandemic have come up for renewal, almost always at much higher rates compared with five years prior.
That trend is part of the reason mortgage delinquencies are climbing, with Canada Mortgage and Housing Corporation (CMHC) indicating on Tuesday it doesn’t expect the rise of mortgage arrears in Ontario to end until the middle of next year.
Serra suggested the Bank of Canada’s decision to dramatically cut rates in 2020 might have been the wrong one looking back.
