Canada Adds Guidelines for Banks to Prevent Mortgage Defaults

Canadian banks need to take steps to assist mortgage holders who are struggling to stay above water after a rapid spike in interest rates, according to new guidelines issued Wednesday.

Recommended measures include waiving any fees for lump sum or pre-payments made to reduce the debt burden or for selling the house to pay back the loan entirely, according to the new guidelines released Wednesday from the Financial Consumer Agency of Canada. The guidelines also spell out ways for banks to reduce a borrower’s monthly payment by giving them a longer timeline to pay the full loan back.

“Today’s economic ...