Senior Deputy Governor Carolyn Rogers of the Bank of Canada has advised Canadians to brace for the likelihood of prolonged higher interest rates, attributing the shift to global adjustments and the diminishing factors that kept rates low during the pandemic. Rogers stressed the importance of proactive adjustments to safeguard the financial system’s resilience, noting a significant decline in consumer spending and borrowing in response to the unprecedented rate increases over the past 16 months.
Despite the slowdown in household credit growth, Rogers highlighted the potential ongoing strain on mortgage holders with fixed payments as interest rates persist at elevated levels, particularly during the upcoming 2026 renewal cycle.
Rogers acknowledged that the forces that maintained record-low interest rates, such as increased savings by aging baby boomers and emerging economies joining the global market, are waning. She pointed out that the recent economic adaptation to higher rates necessitates continued proactive adjustments. While there is currently a modest increase in financial stress among households with mortgages, Rogers cautioned that the impact on mortgage borrowers with fixed payments is likely to persist, with a significant number facing potentially higher payments by the end of 2026.
Published by Steve Huebl