How Fewer Banking Fees Will Help Mortgage Holders In Canada

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New rules in the banking industry could lead to reduced banking fees and provide assistance to mortgage holders in Canada. These changes aim to benefit Canadians by offering them more affordable banking services and support in managing their mortgages.

On October 17, Deputy Prime Minister and Minister of Finance Chrystia Freeland announced new affordability measures related to mortgages and banking, prepared in consultation with the Financial Consumer Agency of Canada (FCAC), a consumer watchdog organization that focuses on financial services.

The package is the latest in a series of changes introduced by the federal government over the last two years, designed to assist Canadians struggling with inflation and the high cost of living.

What is the Government of Canada proposing?

Minister Freeland’s proposal tackles four areas: mortgages, bank account fees, junk fees and dispute resolution. Junk fees include the cost Canadians pay for non-sufficient funds (NSF), overdraft protection, debit transactions and Interac e-Transfers. Here’s how:

New mortgage guidelines for banks

In early October, Minister Freeland met with the CEOs of Canada’s largest banks to discuss the government’s new mortgage guideline, issued by the FCAC, that asks banks to proactively assist Canadian mortgage holders who are struggling with high mortgage rates. In particular, the guideline focuses on homeowners who are at risk of defaulting on their mortgage.

The guideline asks that banks identify consumers who are at risk and explore assistance in the form of fee waivers, no-cost financial education, lengthened mortgage amortization periods and mortgage relief measures.

Eliminating some bank account and junk fees

The government has tasked the FCAC with “setting expectations” for banks to provide free or low-cost banking options and with “encouraging” them to remove junk charges.

Although there are numerous no-fee bank accounts available to Canadians, they are typically online-only. For chequing accounts at a Big Six bank, costs can range from $4 to $40 monthly, with extra charges of around $1 to $1.50 for Interac e-Transfers, over-limit transactions, and out-of-network ATM use. Penalties for non-sufficient funds can be a whopping $45 to $50. Currently, the big banks offer low- or no-cost options to youth, students and seniors, and Freeland is hoping to expand eligibility to even more Canadians.

See the best no-fee chequing accounts in Canada

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