The Globe and Mail reports in its Monday edition that a growing share of mortgage loans made by major Canadian banks have amortization periods of more than 30 years, a sign of the rising stress borrowers are under as interest rates soar. The Globe's James Bradshaw and Rachelle Younglai write that with every interest-rate hike by Canada's central bank, the cost to service a variable-rate mortgage rises. At most banks, however, the borrower's monthly payment does not increase right away. Instead, the amortization period -- the time it takes to pay the loan off in full -- gets longer. When the loan's term comes up for renewal, the amortization has to snap back to its original length, which in the current environment of rising rates forces a sudden increase in monthly payments. At RBC, BMO and CBC, the percentage of mortgages with an amortization of more than 30 years recently doubled in a three-month span. That is one of the clearest indicators that stress is building on variable-rate mortgage holders, who are increasingly paying more interest and less principal on their loans. At RBC, about 125,000 mortgage clients have reached or are nearing a trigger point that requires an immediate increase in monthly payments.
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