TORONTO - Nearly half of all existing mortgages in Canada will need to be renewed in this year, substantially more than in prior years, according to a new report, amid rising interest rates and new rules that make it tougher for some borrowers to shop around.
A CIBC Capital Markets report says an estimated 47 per cent of all existing mortgages will need to be refinanced this year, up from the 25 to 35 per cent range in a typical year.
The increase is an unintended consequence of various rounds of regulatory changes aimed at reducing risk coupled with rising house prices that made it harder for homebuyers to qualify, says CIBC's executive director and head of North American Rates Strategy.
Ian Pollick says borrowers in recent years have taken on mortgages with two- or three-year durations, which are now up for renewal alongside the typical five-year mortgages.
The increase in renewals comes as mortgage rates have been rising with five-year fixed rates up about half a percentage point compared with a year ago.
Meanwhile, new lending rules introduced this year stipulate that homeowners looking to renew their uninsured mortgage are subject to a new stress test, unless they stick with their existing provider, hobbling their ability to seek out a more competitive rate.