Central Banks
Stressed Homeowners in Canada Are Turning to Credit Cards
- Bank of Canada sees rising financial pain among new buyers
- Commercial banks solid, face limited spillover from US turmoil
Recent homebuyers in Canada are extending their loans to make payments more manageable.
Photographer: Christinne Muschi/BloombergThis article is for subscribers only.
The Bank of Canada is growing more concerned about the ability of households to handle their debt in a higher interest-rate environment, with more homeowners relying on credit cards to meet expenses in the face of steeper mortgage payments.
Early signs of financial stress for households are emerging and many of them now have less financial flexibility, the central bank said in its annual review of the financial system published Thursday. Recent homebuyers are extending their loans to make payments more manageable: The share of new mortgages with an amortization period longer than 25 years rose to 46% from 41% over the last year.