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Interest Rate and Renewal Risk for Mortgages

Author

Listed:
  • Olga Bilyk
  • Cameron MacDonald
  • Brian Peterson

Abstract

In this note, we explore two types of risk faced by holders of mortgages and home equity lines of credit (HELOCs) in the context of rising interest rates: interest rate risk and renewal risk. We estimate that roughly 53 per cent of outstanding mortgages and HELOCs will face interest rate risk in 2018. However, only about 26 per cent of outstanding mortgages will be renewed in 2018.

Suggested Citation

  • Olga Bilyk & Cameron MacDonald & Brian Peterson, 2018. "Interest Rate and Renewal Risk for Mortgages," Staff Analytical Notes 2018-18, Bank of Canada.
    • Handle: RePEc:bca:bocsan:18-18
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    More about this item

    Keywords

    Credit and credit aggregates; Financial Institutions; Interest rates; Recent economic and financial developments;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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