Bank of Canada Senior Deputy Governor Carolyn Rogers warned in November 2024 that repeatedly changing mortgage rules to reduce monthly payments could create larger long-term costs and financial risks without solving the shortage of housing.
Her central argument was that housing affordability ultimately depends on bringing supply and demand into better balance. Mortgage policy affects access to credit and who carries risk, but cheaper or more flexible borrowing can also increase demand and house prices.
Why the Bank was focused on renewals
More than four million Canadian mortgages—about 60% of the outstanding total at the time—were expected to renew over the following two years. Many borrowers had not renewed since interest rates began rising in 2022 and were likely to face higher payments even as policy rates started to decline.
Rogers described widespread mortgage losses as a tail risk rather than the Bank’s forecast. Canadian arrears remained historically low, but a large payment shock could cause households to cut other spending, increase losses for lenders and insurers and affect the wider economy.
Every mortgage change redistributes risk
A longer amortisation can lower a borrower’s payment today but keep the debt outstanding longer and increase total interest paid. A smaller down payment improves immediate access while reducing the borrower’s equity buffer. A very long fixed-rate term protects the borrower from rate changes but shifts more interest-rate risk to lenders and investors, who may charge more for that protection.
Rogers used an illustrative calculation in which extending an average mortgage from 25 to 30 years reduced the monthly payment by about C$200 but added roughly C$50,000 in lifetime interest at then-current rates. It was an example, not a quote for every borrower; actual results depend on balance, rate, renewal and prepayment.
Why the federal government is exposed
About one in four mortgages was insured at origination, and roughly C$590 billion—around one-quarter of Canada’s C$2.4 trillion in outstanding mortgage debt—was backed by the federal government. Policies that expand insured lending can therefore affect taxpayers as well as borrowers, banks and investors.
Canada’s mortgage stress tests and underwriting rules were designed to limit excessive leverage and preserve resilience. Rogers did not say rules should never change. She said changes should be assessed as a connected system rather than promoted as a cost-free affordability measure.
What borrowers should take from the speech
A household approaching renewal should ask its lender for options early, compare total interest rather than only the first payment and understand penalties, variable-rate exposure and amortisation changes. Borrowers facing difficulty can document their finances and ask about relief consistent with federal consumer-protection guidance.
The Bank of Canada sets monetary policy but does not approve individual mortgages or direct home construction. Governments, regulators, lenders, builders and municipalities control different parts of the housing and finance system, which is why no single mortgage-rule adjustment can sustainably fix affordability by itself.
Source: Bank of Canada, “Canada’s mortgage market—A question of balance,” November 6, 2024.
