The Bank of Canada’s financial review for June shows that the proportion of loans of more than 25 years amortization climbed by 10 per cent between 2014 and 2015 to 46 per cent of uninsured mortgage loans.
Although the level of delinquent loans remains relatively low, the BoC report does highlight the impact that longer loan periods have on the overall level of household debt: “The resulting slower repayment of debt leads to a higher aggregate level of household indebtedness.”
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Rising house prices are increasing demand for mortgages with 30 year amortizations as buyers choose – or are forced by the cost – to spread their home loan over longer periods. This is particularly evident in Vancouver and Toronto.