Canadian banks are seeing fewer borrowers with ballooning residential mortgages, but $94-billion of home loans are still troubled.
For the second straight quarter, fewer borrowers are seeing their loans increase in size – also known as negative amortization.
Bank of Montreal, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce had a total of $94-billion in residential loans in negative amortization in their first fiscal quarter ended Jan. 31, according to their financial results released this week. That is down from $110-billion in the fourth quarter ended Oct. 31 and $130-billion for the period ended July 31.
BMO, TD and CIBC are the three major Canadian banks with mortgages that permit negative amortization – a product the federal bank regulator has now called “dangerous” even though these loans have been around for years.
The decline in negatively amortizing loans…
