Following FCAC Guidelines to Manage Fluctuating Rates

Since the beginning of 2022, the Bank of Canada has been increasing interest rates to combat inflation. The recent rate hike has sent shockwaves across the financial industry and even extended to mortgage holders. The impact of higher interest rates is often not immediately seen, but higher interest rates affect fixed-rate and more significantly, variable-rate mortgage holders.

Variable-Rate Mortgage

Consumers who have variable-rate mortgages could see that much of their monthly payment ends up servicing the interest payment rather than reducing their principal.

Fixed-Rate Mortgage

Consumers who have mortgages with fixed rates have also seen a smaller portion of their monthly payment applied to their principal. However, they are less impacted in inflationary times.

It is essential to understand how to manage fluctuating mortgage rates. Canadians with variable-rate mortgages are especially sensitive to interest rate hikes, as the interest levels on their loans fluctuate in relation to the Bank of Canada’s key interest rate. This means that variable-rate mortgage holders will be hit the hardest by the recent interest rate hikes, as their monthly payments will go almost completely to paying off their high interest amount versus paying down their principal.

Considering these factors, we're taking steps to minimize the negative impacts of increased interest rates on you, should you be a variable-rate mortgage holder. We're happy to offer financial advice and strategies on how to manage your finances.

Due to increased interest rates, mortgages may even reach a trigger point. A trigger point is where your regular mortgage payment is no longer enough to repay your loan. With this chance of loan repayments increasing and the possibility of more incremental increases in interest rates, we have been providing our members with guidance on how to handle rising inflation and interest rates. We also disclose the trigger rate to our mortgage holders, and help track the increased interest rate, as per requirements of the Financial Consumer Agency of Canada (FCAC).

The Financial Consumer Agency of Canada (FCAC) is working to protect your financial rights and interests as well. It supervises financial entities and institutions like us. Due to increased interest rates, the cost of borrowing has become more expensive. FCAC focuses its responsibility in three areas: protect, supervise, and educate. It provides guidelines to financial institutions to help you in challenging times. It aims to:

Protect the financial rights of consumers
Provide financial literacy to consumers
Provide consultancy in financial matters
Give a way out of debt for consumers

In this current state, our responsibility as a financial institution is to minimize the negative impact of increased interest rates on variable-rate mortgages. We are playing our part, as per the requirements of the Financial Consumer Agency of Canada (FCAC) by taking the following measures:

Step 1

We are accommodating our members by waiving or decreasing charges where possible.

Step 3

Our member advisors and mortgage specialists are well-trained and equipped to provide assistance and advice.

Step 2

We are offering our members appropriate products and services to help them save more.

Step 4

We proactively guide our members to make mortgage decisions and have created internal resources to help them make decisions.

Though we'll contact you if your trigger rate is reached or will soon be reached, we are also making efforts to communicate more consistently. We are implementing the VeriTouch Customer Relationship Management (CRM) system, by VeriPark, to do this more reliably and efficiently. You deserve help in these difficult times, including measures to minimize any adverse impacts from rate increases. If you need more assistance, please reach out to us.