(Reuters) – Canada’s banking regulator said on Wednesday it will make it easier for borrowers to switch banks when they renew their mortgages by eliminating a rule that industry players have long lobbied against.
Most mortgages have terms of five years or less, compared with the 30-year term that is the norm in the United States.
It is common practice to switch lenders in search of improved interest rates but without changing the amount or repayment schedule – a so-called straight switch.
From Nov. 21, borrowers will no longer need to prove their income meets the Minimum Qualifying Rate when seeking a straight switch.
The change will increase lender options for borrowers who have to renew at interest rates higher than those prevalent during the lower interest rate environment of recent years.
(Reporting by Nilutpal Timsina and Nivedita Balu; Editing by Christopher Cushing)