Canada Bank Watchdog Warns of Housing-Payment Shock by 2026 (1)

Canada’s banking watchdog warned that many homeowners who took out mortgages when rates were near zero during the pandemic will soon face a reckoning as those loans renew.

The “payment shock” faced by some borrowers is among the most important risks currently in the financial system, according to the latest risk outlook from the Office of the Superintendent of Financial Institutions, released Wednesday.

The regulator said that 76% of outstanding residential mortgages as of February will be coming up for renewal by the end of 2026. Most worrisome are the 15% of mortgages that have variable rates with fixed ...