Exploring Canada’s Interest Act & Risk in Canadian Residential Housing & Mortgage Markets

Is Canada’s Interest Act the Source of Unnecessary Risk in Canadian Housing and Residential Mortgage Markets?

More than 95% of mortgages have terms of less than five years. In our current environment, the average mortgage payment for a household in Canada will increase by 50% as the impact of inflation on interest rates is felt. This exposes borrowers to considerable and potentially unnecessary risk. This project identifies an opportunity to protect Canadian mortgage borrowers from this risk with longer-term loans.

This project will investigate the housing and residential mortgage markets in Alberta and Canada, and Section 10(1) of the Interest Act. The project hypothesizes that this section contributes to the inability of lenders to appropriately manage the interest rate risk associated with making residential mortgages with terms longer than five years and to readily access longer-term capital. The section dates from 1880 and a number of experts believe it should be revised. This research will provide a detailed basis for revisions to the Interest Act and will conduct research to compare the Canadian and U.S. markets and include economic modeling of the impact on default risk in the Canadian mortgage markets during periods of interest rate volatility.

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Real Estate Leadership – Supports a healthy real estate market in all communities across Alberta.

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Real Estate Leadership: Equip real estate and related professionals with the expertise to serve the public as trusted advisors on practical and emerging property practices and issues.


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University of Alberta, Centre for Cities and Communities

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