Bank of Montreal Cuts Exposure to Ultra-Long Mortgages in Canada

Loans that will take over 30 years to pay off are declining
Banks have extended terms as borrowers hit trigger rates

The Bank of Montreal (BMO) headquarters in Toronto, Ontario, Canada, on Wednesday, March 8, 2023. Rising rates are expanding Canadian banks' net interest margin, but a flatter and inverted yield curve limits upside, and a peak may come in 2023.Photographer: Della Rollins/Bloomberg

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By Stephanie Hughes

February 27, 2024 at 3:33 PM UTC

This article is for subscribers only.

Bank of Montreal is slowly whittling down a pile of ultra-long mortgages that it granted to Canadian customers to help them handle the rapid rise in interest rates.

When borrowing costs shot up in 2022 and 2023, the Canadian bank allowed clients to extend the time they’ll take to pay off their loans, easing the monthly payment shock. That changed the composition of Bank of Montreal’s domestic mortgage book: by early last year, almost a third of the portfolio had amortization periods exceeding 30 years.