Homeowners in Canada are edging closer to mortgage default as many near the “trigger point” on their loans, according to a federal memo to the superintendent of financial institutions.
A trigger point is when the amount of interest is equal to the fixed monthly mortgage payment, meaning that zero is going to pay off the principal of the loan. At this point, nothing is being paid down on the mortgage itself. If interest rates keep going up, those with variable rate, fixed payment mortgages will need to pay more just to cover the interest payments.
