Will New FCAC Guidelines Protect Canadians From Mortgage Default?

Sean
Author:
Sean
Sean Cooper
Expert Contributor at Loans Canada
Stefani
Reviewed By:
Stefani
Stefani Balinsky
Expert Contributor at Loans Canada
📅
Updated On: January 29, 2025
Get a free, no obligation personal loan quote with rates as low as 9.99%
Free quote with no impact to your credit

The Financial Consumer Agency of Canada (FCAC) released new guidelines to better protect Canadians at risk of defaulting on their mortgage. What are the new guidelines and are they helpful to most Canadian homeowners? Read on to find out.

The New FCAC Mortgage Guidelines to Protect Homeowners

Higher mortgage rates coupled with higher costs of living are stretching most Canadian household budgets thin.

To better address this, the FCAC says that homeowners with existing mortgages who are experiencing severe financial distress should have access to all available relief measures. Those relief measures include waiving prepayment penalties, internal fees and cost, not charging interest on interest and extending the amortization.

Making Canadian Financial Institutions More Accountable

It’s not a one size fits all solution. It’s on a case-by-case basis. Financial institutions are supposed to provide tailored support to those most at risk.

But that’s not all. Canadian financial institutions are supposed to proactively monitor homeowners for early signs of severe stress. They are also supposed to keep records of any homeowners they have contacted with concerns about their ability to make their mortgage payments.

To make the financial institutions offering mortgages accountable, the FCAC says that they should have a formal complaint handling process. If homeowners don’t feel like their complaint is adequately addressed, they can escalate it to an external third party to investigate further.

How Did We End Up Here?

These new guidelines are necessary because the Bank of Canada really dropped the ball when it comes to its messaging surrounding interest rates.

In July 2020, Bank of Canada Governor Tiff Macklem assured Canadians that borrowing rates would remain at historic lows for a “long time.”

As reported by BNNBloomberg at the time, Macklem said, “Our message to Canadians is that interest rates are very low and they’re going to be there for a long time.” 

The Bank of Canada then proceeded to increase interest rates by four percent just two years later, representing the fastest interest-rate increases we have seen in decades.

I don’t know about you, but two years doesn’t seem like a “long time.” Many Canadians signed up for variable rate mortgages based on our central bank’s assurance that rates would remain low for a long time, leaving them in a financial bind.

As of January 2025, the Bank of Canada cut the key interest rate to 3.00% after a few rate cuts.

The Canadians Paying Variable Mortgage Rates

The ones who are struggling the most now are those with variable mortgage payments. With that type of mortgage, the payment automatically adjusts with changes in the lender’s prime rate. However, they aren’t the only ones struggling.

Those with fixed payments on variable rate mortgages are seeing a large portion of their payments going towards interest. Some are even facing negative amortization. These new guidelines are meant to address that so that these borrowers don’t fall through the cracks and face a huge jump in their mortgage payments when their mortgage comes up for renewal.

See How Much You Qualify For

100% FREE. NO OBLIGATION.

The Path Forward

Mortgage delinquency rates remain near historic lows in Canada because Canadians find a way to make their mortgage payments. Whether it’s taking on a second job, borrowing from family, or using their line of credit. However, there’s only so much belt tightening Canadians can do.

The new guidelines mean to help Canadian homeowners who can’t make their mortgage payments despite doing all the above. These are welcome, but it’s a lot like the old saying, closing the barn door after the horse has bolted. The new guidelines would have been nice months ago.

Sean Cooper avatar on Loans Canada
Sean Cooper

Sean Cooper is the bestselling author of the book, Burn Your Mortgage: The Simple, Powerful Path to Financial Freedom for Canadians. He bought his first house when he was only 27 in Toronto and paid off his mortgage in just 3 years by age 30. An in-demand Personal Finance Journalist, Money Coach, and Speaker, his articles and blogs have been featured in publications such as the Toronto Star, Globe and Mail, Financial Post and MoneySense.

More From This Author

Special Offers

More From Our Experts

https://loanscanada.ca/wp-content/uploads/2016/08/interest-adjustment.png
Interest Adjustment Date: The Mortgage Term You Didn’t Know You Needed To Know

By Sean Cooper
Updated on June 24, 2025

Everything you need to know about Interest Adjustment dates, an often forgotten closing cost when buying a home.

https://loanscanada.ca/wp-content/uploads/2022/03/Financing-a-Tiny-House.png
Tiny Home Mortgage In Canada

By Lisa Rennie
Updated on June 24, 2025

Thinking of buying a tiny home instead of a regular house? Find all the tiny home mortgage options in Canada.

https://loanscanada.ca/wp-content/uploads/2024/06/farm-mortgage-1.png
How To Get A Farm Mortgage

By Bryan Daly
Updated on June 16, 2025

Thinking about investing in a farm or rural real estate, we've compiled everything you need to know.

https://loanscanada.ca/wp-content/uploads/2025/05/Rate-Hold.png
What Is A Rate Hold On A Mortgage?

By Jessica Martel
Updated on May 20, 2025

A rate-hold mortgage offers many benefits, including the ability to search the market for the best deal without fear of losing out on another deal.

https://loanscanada.ca/wp-content/uploads/2021/05/Average-Home-Prices-In-Alberta-1.png
Average House Price In Alberta 2025

By Lisa Rennie
Updated on March 29, 2025

If you plan on buying a house in any real estate market across Alberta, you should learn about the average house price in Alberta.

https://loanscanada.ca/wp-content/uploads/2021/05/Average-Home-Prices-In-Ontario.png
Average Home Prices In Ontario 2025

By Lisa Rennie
Updated on March 29, 2025

If you've got your sights set on buying a home in Ontario, you'd be well-advised to find out the average house price in Ontario.

https://loanscanada.ca/wp-content/uploads/2025/03/Switch-Mortgage.png
How To Switch Mortgage Lenders

By Jessica Martel
Updated on March 26, 2025

Want to switch your mortgage lender? Consider when you should switch your mortgage and the costs involved to help you save money.

https://loanscanada.ca/wp-content/uploads/2021/05/Average-Home-Prices-In-Quebec-1.png
Average Home Prices In Quebec 2025

By Lisa Rennie
Updated on March 25, 2025

If you're thinking of buying a home in Quebec, one of the first things you should do is get familiar with the average house price in Quebec.

Recognized As One Of Canada's Top Growing Companies

Why choose Loans Canada?

Apply Once &
Get Multiple Offers
Save Time
And Money
Get Your Free
Credit Score
Free
Service
Expert Tips
And Advice
Exclusive
Offers