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Struggling mortgage holders could see lenders waive fees under new guidelines

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Ottawa has published a new set of guidelines to standardize how Canada’s federally regulated lenders offer mortgage relief to consumers struggling under the weight of higher interest rates.

The new approach could save some mortgage holders on costly fees and penalties that come with refinancing, paying lump sums or otherwise altering the terms of their loans.

The guide published Wednesday from the Financial Consumer Agency of Canada seeks to alleviate the burden for homeowners and other mortgage holders with variable rates or those renewing their fixed-rate terms.

These mortgage holders have, in many cases, seen their monthly payments soar over the past year as the Bank of Canada raised interest rates by 4.5 percentage points since March 2022.

Variable rate mortgage holders have either seen their payments rise in lockstep with the central bank policy rate or seen their amortizations extended as more of their monthly payments go towards paying down rising interest.

Some homeowners who took out fixed-rate mortgages when rates were low during the COVID-19 pandemic, meanwhile, are today renewing into much higher interest rates and facing substantial jumps in their monthly payments.

The FCAC guide focuses on individuals who are at risk of defaulting on their mortgage as a result of higher payments in combination with a rising cost of living.

Banks and other lenders will sometimes offer various forms of relief for consumers struggling in these scenarios, but the FCAC’s new guidelines seek to standardize the approach from federally regulated institutions. The agency notes it cannot prescribe direct action that institutions should take, but has set expectations for what the lenders should consider in such circumstances.

For example, the guidelines recommend waiving prepayment penalties as well as internal fees related to altering mortgage terms, as well as not charging interest on interest.

In instances where banks consider extending the loan’s amortization — stretching out the period of time over which the mortgage is paid back to keep regular payments under control — the FCAC says this should be done “for the shortest period possible.”

Banks are also expected to closely monitor their mortgage books for consumers showing signs of risk. The agency calls on lenders to reach out proactively to Canadians who are at risk of financial distress to explain their options.

The guidelines mark the fulfilment of a promise from the Liberals’ 2023 budget, which pledged to establish a code of conduct to protect mortgage holders.

Finance Minister Chrystia Freeland spoke about the FCAC guidelines at an event in Toronto on Wednesday afternoon, saying the goal was to help Canadians struggling with their mortgages to get through ongoing economic difficulties.

“The guideline published today is intended to protect Canadians by ensuring their financial institutions treat them fairly and provide them with the tailored mortgage relief they need,” she said.

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Netflix’s subscriber growth slows as gains from password-sharing crackdown subside

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Netflix on Thursday reported that its subscriber growth slowed dramatically during the summer, a sign the huge gains from the video-streaming service’s crackdown on freeloading viewers is tapering off.

The 5.1 million subscribers that Netflix added during the July-September period represented a 42% decline from the total gained during the same time last year. Even so, the company’s revenue and profit rose at a faster pace than analysts had projected, according to FactSet Research.

Netflix ended September with 282.7 million worldwide subscribers — far more than any other streaming service.

The Los Gatos, California, company earned $2.36 billion, or $5.40 per share, a 41% increase from the same time last year. Revenue climbed 15% from a year ago to $9.82 billion. Netflix management predicted the company’s revenue will rise at the same 15% year-over-year pace during the October-December period, slightly than better than analysts have been expecting.

The strong financial performance in the past quarter coupled with the upbeat forecast eclipsed any worries about slowing subscriber growth. Netflix’s stock price surged nearly 4% in extended trading after the numbers came out, building upon a more than 40% increase in the company’s shares so far this year.

The past quarter’s subscriber gains were the lowest posted in any three-month period since the beginning of last year. That drop-off indicates Netflix is shifting to a new phase after reaping the benefits from a ban on the once-rampant practice of sharing account passwords that enabled an estimated 100 million people watch its popular service without paying for it.

The crackdown, triggered by a rare loss of subscribers coming out of the pandemic in 2022, helped Netflix add 57 million subscribers from June 2022 through this June — an average of more than 7 million per quarter, while many of its industry rivals have been struggling as households curbed their discretionary spending.

Netflix’s gains also were propelled by a low-priced version of its service that included commercials for the first time in its history. The company still is only getting a small fraction of its revenue from the 2-year-old advertising push, but Netflix is intensifying its focus on that segment of its business to help boost its profits.

In a letter to shareholder, Netflix reiterated previous cautionary notes about its expansion into advertising, though the low-priced option including commercials has become its fastest growing segment.

“We have much more work to do improving our offering for advertisers, which will be a priority over the next few years,” Netflix management wrote in the letter.

As part of its evolution, Netflix has been increasingly supplementing its lineup of scripted TV series and movies with live programming, such as a Labor Day spectacle featuring renowned glutton Joey Chestnut setting a world record for gorging on hot dogs in a showdown with his longtime nemesis Takeru Kobayashi.

Netflix will be trying to attract more viewer during the current quarter with a Nov. 15 fight pitting former heavyweight champion Mike Tyson against Jake Paul, a YouTube sensation turned boxer, and two National Football League games on Christmas Day.

The Canadian Press. All rights reserved.

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